With Labor Day behind us and the winter holidays ahead, the typical seasonal drop in housing demand has been barely a blip on the radar screen this year. But is a shift coming?
In the Triangle we’ve seen buyers clamoring for homes in all price ranges, and snapping them up in days or within a few weeks*. Record low interest rates have ignited robust purchase demand activity, which is up nationally 25% from a year ago and has been growing at double digit rates for four consecutive months.
The problem is supply. “Heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity,” according to Freddie Mac. In the Triangle, our entry-level housing supply is just weeks where in a balanced market, the housing supply will be between 5 and 6 months’ supply. The lack of inventory in most regions of the country, which was sluggish in most markets even pre-pandemic, has been unable to keep up with the demand.
Early in the COVID-19 crisis, many sellers held back putting their homes on the market, fearful of strangers walking through their home. In spite of strict safety protocols we have in place, some sellers may still be reluctant. But the larger concern for many potential sellers is where they will move if they sell.
New construction would help...“But builders are just now getting back into play,” said Dan Elsea, president, Real Estate One in Detroit. “Land is expensive and financing is tough, especially for new construction in the more affordable, mid-range space.”
In fact, according to Robert Dietz, senior vice president and chief economist for the National Association of Home Builders, builder confidence is at 35-year high as developers note the lean resale inventory and see a growing demand for new homes.
“The big challenge is lumber,” said Dietz. “The hot housing market, insufficient domestic production, and tariffs on Canadian imports have resulted in a 160% increase in lumber prices since mid-April.”
That is adding about $16,000 per new single-family home, he said.
“But building is slowly picking up after recession-lows in the spring,” he noted. “The number of single-family homes in various stages of construction in July was just 3% lower than it was last July, while construction of multi-family residences has increased by almost 10% year over year.”
If new construction is slow to meet the need, how do we bring more inventory into the market? There are sellers out there wanting to sell and if they felt they could find their next home to move to, many would put their homes on the market.
If you’re one of those sellers, the good news is that you don't have to wait forever to sell your home and right-size. I specialize in helping home owners sell and find their next home quickly. If you prefer to find your next home first before selling, understand that you have options to make that happen on your timeline with Ribbon Cash.
Is a Shift Coming?
“Sellers are calling the shots in today’s market; prices are rising and housing inventory is vanishing almost as fast as it appears,” according to Realtor.com®’s Chief Economist, Danielle Hale. “But this week’s report revealed two indicators worth keeping an eye on. Housing demand cooled slightly, while new listings showed a smaller decline than previous weeks. This could be a hiccup in weekly activity, or if these trends continue, they could signal a shift in market dynamics leading into the fall when political, economic and health-related uncertainties abound.”
Whether you’re looking to sell your home now, within the next year, or you’re just curious about the market and your equity position, I would love to meet with you for a personalized evaluation. Feel free to reach out to me to see if now might be the right time to Buy, Sell, or Invest in a new property.
*Average DOM by Price Point – Year-to-Date
· $100k - $250k 18
· $250k - $375k 18
· $375k - $500k 25
· $500k - $600k 25
· $600k - $700k 27
· $700k - $800k 41
Average DOM $100k - $800k 26
DOM Data Source: Triangle MLS
Mobile: 919-675-5366
E-Mail: Jean.Scott@kw.com
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