Our real estate market is once again shifting.

 

Prices are still increasing and the battle for inventory continues on, but we are starting to gradually work our way back to a neutral market.

 

As of May 20th, there are currently 3,398 single family homes for sale, whether you’re shopping for $300k or $3M! This inventory shortage is a problem that will not go away overnight. 

 

According to Reuters, consumer price inflation increased by 0.8% from March to April, the largest increase since June 2009. It increased by 4.2% year over year, the highest since September of 2008. Experts blame supply chain challenges and last Spring’s weak readings. Many economists believe we've seen the brunt of inflation already.?

 

How long will it take us to get to a balanced market?

 

It took 8 months to drop in 2005. If we stay at this rate, we are looking at 11.5 months to get to balance, which is May of 2022. It is measuring like 2005 which only means that prices are going up at a slower rate.

 

Yes, it is still a good time to buy!

 

Buying in a seller’s market is a winner’s market. Watch the equity grow. If it drops, it is ok because you have a down payment. Buyer’s markets are losing markets.  In a Buyer’s market, keep dropping, and both buyers and sellers are at a disadvantage.

 

Just because it goes up does not mean that it will go down. The worst case is going down to

balance. Nothing is indicating a decline in prices and no one is predicting one. If supply and demand come together and demand is below balance, the market will be slow and boring with fewer transactions. If supply and demand come together with demand above balance, then the market will be fast-moving, exciting, and have lots of transactions.

 

Material prices are going up. Lumber has increased the most at roughly 430% year over year.  The increased cost of materials for the average new home is nearly $36,000. Condos are up $1,300. Apartments are up $119 a month. Builders pass the costs to the consumers. Builders are begging appraisers to take into consideration the increased material when appraising. If an appraisal doesn’t come in at contract then the builders will struggle to sell.

 

Forbearance

 

When forbearance ends, it will not rain houses.  There are about 2.2 million mortgages or about 4.2% in an active forbearance plan. There have been huge improvements in forbearance counts. 54% have successfully exited the plan. If all states are equal, each would have about 46,000 properties in forbearance. Lots of people are exiting and are current, about 47% are ok.

 

The struggling amount is about 16.4% and that leaves us 7,128 new listings for all of them if they are all struggling and need to sell right away. That is not enough to cause a problem.

 

Still have questions about the current market?  If you're considering buying or selling soon, connect with a Sloat Group agent to help guide you through this unique time!