And that’s a WRAP!! Within minutes, or what felt like minutes, quarter one is complete.
Let’s review 2022 quarter one’s happenings….
- Inflation marches on…….
- Rates continue to rise
- Inventory is scarce
- iBuyers are on the rise
- WVMLS recap
- Piatt’s two cents…..
Inflation marches on….and on….
- US Inflation Rate Hits New 40-Year High of 7.9%
- In February of 2022, the highest since January of 1982.
- Energy remained the biggest contributor (25.6% vs 27% in January)
- Gasoline prices surging 38% (40% in January).
- Inflation accelerated for shelter / housing (4.7% vs 4.4%)
- Food (7.9% vs 7%, the largest since July of 1981), namely food at home (8.6% vs 7.4%)
- New vehicles (12.4% vs 12.2%); and used cars and trucks (41.2% vs 40.5%).
- For the real estate and construction industry, an elevated inflation rate and the setbacks from the pandemic have resulted in what some call a perfect storm that is showing to have a magnified impact on the development costs and timelines of new projects.
- Construction material costs over the course of the year were up 23.1 percent, almost four times the market benchmark.
- And it is not going to get better…..
Rates continue to rise:
- As of April 8th, rates hit 6.5% for a 30-year fixed mortgage
- According to Freddie Mac, History suggests that when rates rise, there is an initial bump in home prices as many move quickly to buy a home before rates increase further. But after that period, home prices slow. Freddie Mac analysis shows that a 1% increase in mortgage rates results in home price appreciation that is 4 percentage points lower. For instance, a 1% increase in mortgage rates would change home price growth from 11% to 7%.
iBuyers on the rise:
- The question still remains, “Who needs an instant offer from a tech company if you can sell your house on the open market faster than you ever thought possible for more money than you ever expected?”
- Despite a major iBuyer exiting the market (Zillow); Opendoor, Offerpad and RedfinNow significantly increased their purchasing activity.
- In fact, buyers registered a breakout year in 2021 and continue to see growth.
- Collectively, iBuyers purchased more than 71,000 homes in 2021, about a 1.3% national marketshare.
- That compares with about 14,000 homes purchased in 2020, when the pandemic temporarily paused iBuying.
- Be on the look out for this to continue to rise in quarter 2.
Piatt’s two cents:
- In regard to iBuyers:
- It’s time for agents and brokers to stop questioning whether iBuying is good or bad, and start asking if clients could benefit from considering an instant offer as one of several options.
- They are serious players that can be used to our benefit, if presented correctly.
- For your clients, it’s all about cost vs. convenience. You’ll need to be able to explain both.
- Ask our Ticor Sales executives about how to compare an iBuying option vs. YOU, the agent option.
- Rising rates:
- The hope is that, these rising rates will stabilize the house prices and appreciation in the future.
- BECAUSE, we have to remember, every time rates rise .25%; a million buyers are knocked out of the market.
- My advice, Stay in the game. Buy land.
- Supply vs. demand:
- My two cents……it’s a simple game of supply vs. demand. Our supply has not reached the demand, locally and nationally…..We need housing.
- We even will ALL the factors I stated above, there are STILL qualified and READY buyers to jump.
- And weigh the cost for YOU….
- Stabilizing your monthly income should be your focus during these times.
- Remember, if you are renting, your rent will increase 2-9% each and every year, if you live in Oregon or any other rent-controlled state.
- Owning = Stability.
Thanks for joining me!
