The housing market was tight on inventory even before the epidemic. Unfortunately we are nowhere near the end of the problem – but the effects of the epidemic seem to be finally diminishing.
Home sales rose in July
New data released by the National Association of Realtors (NAR) found that existing home sales rose a slight 2% in July – the second month in a row. According to the current season, the combined annual rate is 5.99 million.
Sales have risen 1.5% since last year’s warm summer.
Lawrence Eun, chief economist at NAR, said: “We see that inventory is starting to tick up, which will reduce the intensity of multiple offers. Most of the growth in home sales is still happening in the high-end market, while the mid-lower areas are not growing as much because there are still very few starter homes available.
Housing has been difficult for low-income Americans since the epidemic began. Prices have skyrocketed dramatically, and many families have been unnecessarily financially damaged by the epidemic. The reality is that many home buyers are planning to move out of the market until prices start to fall. In fact, only 0% of the market in July was made up of first-time homebuyers, a group that 40 historically accounted for about 0% of the market.
Bidding battles are still going on regularly. As of June, 89% of homes have been sold in less than a month – a huge jump from 56% in June 2019. Moreover, the houses spent 10 days less in the market than in June 2019 or a total of 17. The sellers had almost doubled the number of offers, a total of 4, then compared.
Redfin’s buyer demand index shows almost the same level of demand as last summer. However, it is important to note that the index has been steadily declining since the all-time high in February. Although still about 50 points higher than in 2019, it is declining.
What factors are increasing supply?
We are still far from meeting the demand, but some things are pushing the ball towards balance.
First, with the rapid spread of delta diversity, there is the potential for stupid deals due to growing lawsuits and disruptions. Daniel Hale, chief economist at Realtor.com, said: “Continued economic recovery is the key to maintaining sales momentum and anything that hinders progress, such as the growing growth of Covid, could certainly push home sales.”
While COVID-19 may not be the only reason to increase supply, it is a reason.
Second, timber prices continue to fall, now in its 11th week of decline. Prices have fallen 74% to 39 399 since last Friday, reaching an all-time high of 5 1,515 per thousand board feet.
While there won’t be an immediate impact on the consumer end of the market, the return of pre-epidemic timber prices provides an incentive for builders who are sitting on the sidelines due to increased costs.
Wood is not only the building material included in house construction, but it is an integral element. Another concern is that the prices of cables, OSB and other materials are still hovering around the highest levels.
Regardless, the reduction of wood will bring back some homebuilders.
Third, we can only see a decline in buyer demand, which will lead to sales and listing profits.
Although demand is still skyrocketing, as mentioned earlier, economic curvature will naturally increase home sales.
Whether it’s wood, fleeing appreciation will push buyers out of many markets, give them war tenders, or inadequate wage growth চাহিদা the demand for current market pricing ধীরে is slowly declining.
Where are we going?
We do not know where the decline in demand will lead. We are still short of millions of new construction housing units, which will help us catch up. It’s probably we’ll be in the seller’s market until those housing units appear, whenever it can.
It is also a matter of government and politics. Some local and state governments have created strict regulations and environmental procedures that make it difficult to cut with red tape.
California, for example, recently mandated new solar panels and battery storage for most new high-rise residential development projects. In America’s most expensive state for housing, this type of legislation makes it difficult for lawmakers to carry out projects and make a profit, thus preventing them from being sent to a more profitable market with less hoop. Adding to the capacity crisis, builders must increase unit prices at breaks, including costs.
This is just one example. There are countless other regulations and laws that have led to dramatic housing price increases in California and its affordability elsewhere in the country.
Going forward, it will be interesting to see how governments respond to housing issues and whether the economy will continue to recover at a reasonable rate or fall short of its targets.