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.” 

 

The U.S. is more than 3 million homes short of the demand from would-be homebuyers, according to Freddie Mac. 

NPR states, “Pandemic-related supply chain problems aren’t helping. They’re adding tens of thousands of dollars in cost to the typical house. But the roots of the problem go back much further — to the housing bubble collapse in 2008.”

How so?

As homebuilders went out of business during the crash, tradespeople found other work, or got trained for new jobs. 

For more than a decade, building stayed below normal. 

Then the largest generation, millennials, entered the housing market. 

Here we are – millions of homes short. 

How do we rectify the issue?

Emerson Claus, president of the Home Builders and Remodelers Association of Massachusetts, suggests small homes on less land an/or townhomes

Claus discusses a few things standing in the way of allowing this to happen here. 

 

What do rising mortgage rates mean for purchasing power? Read below to find out how much rates have increased,  an example how how the rate increase effects the lifetime cost of a mortgage, and and a comparison of previous yearly rates.

 

Mortgage rates jumped above 4% to their highest level since April 2019. Specifically, the 30-year fixed mortgage rate rose to 4.16% from 3.85% the previous week.

 

The National Association of Realtors signaled multiple times before that mortgage rates would rise in response to the Federal Reserve’s strategy of raising short-term interest rates.

 

Although the Federal Reserve doesn’t set up mortgage rates, a higher rate for banks typically makes borrowing more expensive, affecting the 10-year Treasury bond – an indicator for mortgage rates.

 

NAR expects mortgage rates to average around 4.3% at the end of the year.

 

What does this mean for purchasing power?

 

Forbes Advisor provides a clear example of how a 1% rate increase impacts the lifetime cost of a home mortgage loan.

 

Take a family shopping around for a $300,000 30-year, fixed-rate mortgage. If banks were offering them an interest rate of 3.5%, the total lifetime cost of the mortgage would be approximately $485,000, with nearly $185,000 of that accounting for interest charges. Monthly payments would clock in around $1,340.

 

Let’s say the Fed had raised interest rates by 1% before the family got a loan, and the interest rate offered by banks for a $300,000 home mortgage loan rose to 4.5%. Over the 30-year life of the loan, the family would pay a total of more than $547,000, with interest charges accounting for $247,000 of that amount. Their monthly mortgage payment would be approximately $1,520.

 

Even with the rising rates – today’s rates are still favorable

 

Rates around 4% are still fairly low compared to historical figures.

 

Annual averages over the past two decades from the Freddie Mac survey, which follows similar trends to the Bankrate survey used in this article, show that rates remain quite favorable compared to what they were in fairly recent memory.

 

Rates have risen sharply this year but they still are favorable when compared to levels seen in the fairly recent past.

 

Before the 2008 crash, “good” rates were still above 5%, and rates were well above 4% as recently as 2018 and 2019.

 

If you’re looking for some relief in the crowded and competitive housing market in 2022, these 2022 real estate trends may lend some hope.

 

“With more housing inventory to hit the market, the intense multiple offers will start to ease,” according to Lawrence Yun, the National Association of Realtor’s chief economist. “Home prices will continue to rise but at a slower pace.”

 

Take a look below at the trends Salem News says will affect buying and selling in 2022.

 

1. Mortgage Rates Will Continue Rising

Mortgages rates are predicted to rise to 3.6% by the end of 2022. What does this mean for home-buyers? Assuming rates rise from 3% to 3.6%, a $300,000 loan will cost buyers an extra $100 per month.

 

2. Buyer Demand, Competition Will Decline

Redfin’s chief economist, Daryl Fairweather, sees a shift toward a less frothy market. “2022 will bring more balance to the housing market,” she says. “But don’t expect a buyer’s market; just more selection, less frenzy, and slower price growth.”

 

3. Home Value Appreciation Will Slow

A NAR survey of more than 20 economic and housing experts predicted that annual median home prices would increase by 5.7%, far less than the previous year. NAR chief economist Lawrence Yun, “Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve.”

 

4. New Home Construction Will Increase

Mike Fratantoni, the chief economist at the Mortgage Bankers Association, sees the supply shortage starting to ease in 2022, leading to additional inventory hitting the market. “Home-builders will have more success overcoming current building material shortages and should be able to increase the pace of construction to meet the sizable demand for buying,” he said.

This will be an interesting 2022 real estate trend to keep a beat on. According to Random Lengths, lumber prices are now about 22% lower than peak but still about three times their average pre-pandemic price.

5. Investors Will Continue Buying

Danielle Hale, chief economist at Realtor.com, notes homeowners preparing to sell are in a good position going into 2022. Home values are predicted to continue their upward march, albeit at a slower pace.

 

Click here to read the entire Salem News article.

Up 218% in the past five months to $1,238 per thousand board feet!

Material shortages and lack of skilled labor have caused headaches for remodelers and homebuyers across the country, causing delays in remodeling projects.

Despite these challenges, NAHB reported that remodelers’ sentiment continued to improve, with the NAHB/Royal Building Products Remodeling Market Index (RMI) staying well above the benchmark point of 50.

“Every sub, vendor, and supplier is as busy as they’ve ever been,” Matthew Emmons, president of Emmons Construction in Jenks, said. “I think the concern moving forward is timing for completion and keeping quality at a premium during all the chaos of supply chain issues and labor shortages.”

Click here to read more.

Redfin Chief Economist Daryl Fairweather has made her predictions on the state of the housing market in 2022.

Fairweather forecasts that balance will return to the market next year, but not after a scramble to snatch up homes with buyers taking advantage of low rates who will deplete the supply in the first half of 2002. In the second half, new construction will boost sales slightly, as there will be 1% more sales than in 2021, and by the close of 2022, home price growth will slow to 3%.

Some of Fairweather’s for 2022 are as follows

Prediction #1: Mortgage rates will rise and prices will drop
Prediction #2: New listings will hit decade-long high, yet inventory issues will linger
Prediction #3: Rents will continue to ascend and rise by 7%
Prediction #4: Homebuyers will relocate to more affordable cities
Prediction #5: People will relocate to places that align with their politics
Prediction #6: There will be a renewed interest in condos

Click here to read more details about each prediction! 

ATTOM, curator of the nation’s premier property database, today released its third-quarter 2021 U.S. Home Sales Report, which shows that profit margins on median-priced single-family home and condo sales across the United States jumped to 47.6 percent – the highest level since the end of the Great Recession a decade ago.

The report indicates a  typical home sale across the country during the third quarter of 2021 generated a profit of $100,178 while the national median home price hit a record.

Cash sales at a six-year high! Nationwide, all-cash purchases accounted for 34 percent of all single-family house and condo sales in the third quarter of 2021, the highest level since the first quarter of 2015. The third-quarter 2021 number was up from 33.2 percent in the second quarter of 2021 and from 21.4 percent in the third quarter of last year.

Click here to read more about profit margins and home ownership tenure. 

Redfin reports that one third of homes sold in the four weeks went under contract within seven days of hitting the market. The rate has been on the rise for the past six weeks, which is unusual for this time of year when the market typically slows down.

Experts assume the market is heating up due to steady homebuyer demand, and this is proven by the fact home tours are up twice as much from January as they were this time of year in 2019. Still, homes for sale remain few and far between.

“Homes continue to sell quicker and quicker,” said Redfin chief economist Daryl Fairweather. “There are still plenty of homebuyers lying in wait who missed out during the Spring frenzy and they are snatching up homes quickly. Now those homes are selling for near-record prices. The housing market will likely stay hot until mortgage rates rise substantially.”

Key Takeaways:

• One third of homes sold in the past four weeks went under contract within seven days of hitting the market.
• 45% of homes that went under contract accepted an offer within the first two weeks on the market.

Read more about days on market and inventory here. 

The median home price just rose above $400,000 nationally for the first time ever!

The median U.S. home price just passed $400,000 for the first time ever, according to data from the St. Louis Federal Reserve.

In the third quarter the median home price hit $404,700, jumping nearly 13% since third quarter of 2020, when the median sales price was $358,700.

A recent note from Goldman Sachs states home prices could rise another 16% by the end of next year, and the latest forecast by Fannie Mae, median home prices are expected to rise another 7.9% between Q4 2021 and Q4 2022.

“The housing shortage has contributed meaningfully to the record pace of home price appreciation we are currently experiencing,” Morgan Stanley strategists wrote in August. “While the magnitude of the shortage described above means it is unlikely that we will find ourselves with an excess of supply at any point in the near future, the pace at which supply is contracting has slowed.”

Read the rest of the article from yahoo!finance here.