“As kids returned to school, and families finished out their summer trips, we felt a slight lull. Social media in the REALTOR® world was discussing a possible stall. Are showings down?
Buyer's Beware..it is hard out there...
Dated: April 20 2021
Supply and demand are the typical eb and flow of the pricing of most products. With high demand and low supply comes a push-up on prices. In the world of real estate, we are experiencing a 63% drop in available properties in our area from last year which has equated to a push up of prices by 16.7%. Literally, you could have purchased a home last year and probably outperformed most people’s retirement accounts even if you never lived in the home. In past markets, we would have seen builders alleviating this issue but we have a massive issue with inventory shortages, material price increases, and high demand there as well. In the past, a builder may have a deal fall out of contract and would then place the home back on the market at the last list price, but in the new world of real estate, even the builders are taking advantage of low inventory and are running highest and best or lotto approaches to get homes sold. It is a market that we have never seen.
On the other side of the spectrum, the FED continues to keep interest rates low, printing trillions of dollars which did push inflation up a bit this week. Add in another month of hundreds of thousands of jobs lost and we continue to see a failing economy and a booming housing market. With the foreclosure and eviction moratorium still out at June 30th, we have no real data to base housing stats against or even delinquent loan numbers. But I would expect to see some interesting plays by the government after the CFPB paper hit showing that accumulated missed housing payments from COVID could just be tacked on to the end of an owner's loan and it appears we may also get a 40-year mortgage option. Look for institutional investors to keep buying real estate for rentals which are adding to the shortage issue.
I do not see the real estate market losing any steam for quite some time since the inventory shortages will see no reprieve. One thing that could slow the economy quickly would be a rapid rise in interest rates if the FED loses control of the yield curbe, but they will do everything in their power for controlling that as well. So until our next meeting…real estate is HOT, sellers are happy, buyers remain sad.
I have many interests and hobbies to supplement my busy career in real estate. Although I enjoy my work I also enjoy finding free time to enjoy the most important things in life. This includes being w....