The biggest issue right now is the lack of available inventory across the country.
Based on the recently released Census information, we can see that there is a deficit of single-family housing units over the last decade (2010-2019). We are at about 6.5 million homes completed in this country, whereas in the four previous decades we typically saw over 10 million homes completed. Right now, the amount of housing in this country is not keeping up with population growth. Granted, some of that may be from the 2008 housing crash, but it is hard to ignore the decade’s overall drastic change in numbers compared to previous decades.
Speaking of “crash,” Google reported just a couple of weeks ago that the search question, “When is the housing market going to crash?” spiked almost 2,500% in the past month. By revisiting our April 2021 Real Estate Market Update, you can review all the ways that this market is different and how experts don’t expect a crash in U.S. real estate because this time we’re not dealing with an issue in the housing market, we’re dealing with a lack of supply due to external factors.
Total listings are down 53% across the country. So why are the year-over-year change in listings spiking up right now? Because this is a look at listings as compared to this time last year. Last year at this time listings were being pulled off the market, and we were entering lockdown, so that spike in new listings is quite deceiving.
If we look at 2020 compared to 2021, we see a growth of about 100,000 listings in the first quarter, but this year the increase was about 15,000 listings. Coming out of the pandemic, maybe more people are feeling confident about selling their homes.
With it currently taking about 18 days for a new home on the market to go under contract, we just don’t have the time for those homes to actually become inventory. The question now is: When will we start to see listings come back into the market?
According to Pulsenomics, 43% of the economists they surveyed said the U.S. housing market will grow in the second half of the year when folks feel more. Builders are building more, as we see the rising cost of lumber and supplies.
The National Association of Realtors surveyed, and released the top 5 reasons homeowners plans to sell this year. One: The home no longer meets our needs. Coming through the pandemic, the needs that we had in a home have changed. Two: We can make a profit in the current market. Right now, a lot of people are saying this may be the time to sell, given where the market is at. Three: We want a smaller house or less work. People are looking for something they can maintain a lot easier. Four: We want to live closer to friends and family. A byproduct of the pandemic, relationships in those that we’re close with have become so much more important. Five: We want different features and amenities.
According to the National Association of Home Builders Housing Trends Report for the first quarter, 16% of those surveyed are considering the purchase of a home in the next 12 months (up from 10% prior year).
The average profit for a home seller increased 26% over the last year. The average was $55,750 in the first quarter last year, and is just over $70,000 this year. That’s a big jump, and, as Lawrence Yun (the Chief Economist at NAR) said, this “is not a bubble. It is simply a lack of supply.” The lack of supply is keeping an upward pressure on prices.
The number of active mortgages in forbearance has been unchanged for the last several weeks.
400,000 mortgages have left forbearance in the last 2 months
As far as exiting forbearance, about 47% paid in full. 36.5% have worked out some sort of repayment plan, and 16.2% are still in limbo.
Taking a look at the same values over time (since the beginning of the year), we went from about 52% paid in full to 47% – a slow decrease in those paying in full to come off of forbearance. Those that are working out a started out at 32.5%, now at 36.5%. And those in limbo stayed relatively the same, increasing one percentage point.
Expect to see a lot of people optimistic about spending and the economy improving in the next few months.
Mortgage rates ticked up above 3%, and now we sit just below 3% on the average 30 year fixed.
However, mortgage rates are predicted to increase throughout the year as the economy improves.
We’re seeing home price forecasts being adjusted up as we continue through this year, with an average of 6.8%.
Last year, we sold 6.5 million homes across the country. We’re projected to sell over 7 million homes this year. Yet another sign of the economy improving.
Here’s how we wrapped up May in Tallahassee for residential listings: