The Joint Center for Housing Studies of Harvard University published The State of the Nation’s Housing 

The report is very interesting, but a bit dense, so we compiled a few of the most interesting pieces (with page number references) below!

Housing construction at an all time high (page5)

“Single Family stats hit 1.1 million in 2021, exceeding the million-unit mark for the first time in 13 years. Multifamily starts were also at a 30-year high of 470,000 units. The last time housing production was nearly as high was 1973.”

The outlook (page 8)

“Assuming that the Federal Reserve can take runaway inflation without causing a series downturn, the near term outlook for housing demand is largely positive. Demographic shifts are favorable, unemployment is low, and wage growth remains strong. Conditions on the supply side are also encouraging, with supply-chain delays diminishing and a record number of homes set for completion in the coming months.”

Home Price Appreciation Set New Records in the Past Year (Page 9)

“This song trajectory left home prices 38.6% above their early 2020 level and more than double the 2012 low. Indeed nominal home prices stood 59.5% above the mid-2000s peak early this year while the real home prices were up 14.4%.”

For sale inventory at an all time low (page 11)

“Fewer existing homes were available for sale in January 2022 than at any point since the late 1990s.

Home Equity Growth (page 27)

Housing Challenges (page 37)

Section 6 of the The State of the Nation’s Housing  presents some of the challenges we may face in the future.

Click here to read the entire State of the Nation’s Housing Report.

Everyone is wondering, “How will interest rate increases effect both buyers and sellers?”

We’ve pulled together some statements from industry experts to help keep you informed!

For Buyers:
Business Insider provides a general rule of thumb – every percentage point increase in interest rates corresponds to a 10% decrease in purchasing power. In other words, a buyer who could afford $2,000 monthly payments on a $414,000 home with a 3% mortgage, could only afford a $320,000 house with a 6% mortgage.

Jacob Channel, LendingTree’s senior economist states, “Though it’s unlikely that home prices will majorly slump, an increase in housing supply will likely significantly slow home price growth and give would-be buyers more housing options to choose from.”

For Sellers:
Mark Zandi, the chief economist at Moody’s Analytics, says, “I don’t expect a collapse in house prices,” he says. He is not predicting a housing crash anything like what we saw 15 years ago, because of two fundamental forces supporting home prices.

The fundamental forces supporting current home prices are:
1. Supply – there is a shortage of homes available
2. We no longer have reckless mortgage lending – people can afford their loans.

Have any specific questions – email us at info@jasonwhiteteam.com and we’ll do our best to answer them!

Banyan Hill says, ” the Housing market isn’t crashing!”

Google searches for ” Housing crash ” have surged in recent years.

It’s easy to understand the concern- home equity accounts for 65% of the net worth of the average American.

The latest data shows why a housing market crash isn’t a concern:

Homebuilder’s got a wake up call.

New home sales dropped by 16.6% between March and April which supplied the largest inventory in new homes since 2010! It would take 9 months to sell out inventory at last month’s sales pace.

The stage is set for higher home prices

Low levels of existing inventory will continue to drive prices. 

Demand remains high

Future demand should remain strong due to to rising rents. 

Steven Fernandez, research analyst for Strategic Fortunes, says “Keep in mind the rapid growth we’ve seen since 2020 is an anomaly. I wouldn’t bank on growth of that magnitude to continue”

Check out our blogs on the Sevier County, TN real estate marketing statistics and national housing market statistics.

Realtor® Magazine released an article this week acknowledged the recent tumble of lumber prices, to the lowest level in 2022!

Lumber fell below $800 per thousand board feet on Monday, and prices are down 30% to date this year.

It might not be time to celebrate yet, while lumber prices are down, they are up significantly from historical levels.

According to National Home Builders Association data, volatile lumber price swings have been blamed for pushing up the average price of a single-family home, causing more than $18,000 of that over the past year.

“We expect prices in the long term to be challenged with the affordability and rising interest rate headwinds,” Kyle Little, COO of Sherwood Lumber, told Market Insider.

Feel like you might be noticing some similiarities?

Fortunately, today’s circumstances are driven by very different reasons! 

In 2006, the lending practices were much more lax. Underwriting was more loose and there were different mortgage products such as adjustable-rate mortgages with big balloon payments due at the end of the term. 

“Today it’s really just about lack of supply,” says Robert Dietz, chief economist at the National Association of Home Builders.

There are two main ways homes enter the market and both of them are not in full flow. 

1. Builders are struggling to catch up. 

Deitz blames the constraints in the market to what he calls the “five Ls”:

• Labor
• Lots
• Lending
• Lumber and building materials
• Laws and regulations

2. Fewer people are selling.Feel like you might be noticing some similiarities?Fortunately, today’s circumstances are driven by very different reasons! 

A survey by Discover Home Loans found 79% of homeowners would rather renovate their homes than move.

There are more buyers deciding that home ownership is for them! 

Part of that is millennials entering the market and part of that is due to the fact that the pandemic has made remote and hybrid work possible for many. 

When will the market slow down?

Experts surveyed by Zillow predicted it’ll be two years before monthly inventory returns to pre-pandemic norms. They estimated it could be 2024 or 2025 before the portion of first-time buyers again reaches the 45% seen in 2019.

Will rising mortgage rates slow demand?

Dietz says. “The bidding wars are going to cool off.”

Any slowdown caused by higher mortgage rates will make the market a little easier for buyers who are patient, Fairweather says. “By end of summer there should be more homes on the market as not as many buyers will be taking them off the market,” she says.

The market could be in for a shift this year as it copes with higher mortgage rates, Fairweather says. You may want to slow down and consider your options. “I don’t think it’s wise to try to rush the market now because right now the market is adjusting,” she says.

Everyone is curious – what will home prices do during quarter two?

Economist can’t predict exactly what will happen to home prices in quarter two.

Luck for us,  MarketWatch rounded up a few of the top economists options for the near future.

Below are a few of their predictions:

Holden Lewis, mortgage expert from NerdWallet says, “Home prices have been rising fast, and we might see a slowdown beginning in April as home buyers cope with skyrocketing mortgage rates.”

Bankrate analyst, Jeff Ostrowski, says “The shortage of homes means we can expect prices to remain high during the spring home buying season.”

Lawrence Yun, chief economist for the National Association of Realtors, predicts, “ There’s an acute shortage of inventory and many properties have multiple offers on them, despite higher mortgage rates. Some believe the interest rates will rise even more if they wait and thereby further push up demand. Home price growth on a 12-month basis should be on solid double digit appreciation through the spring months.”