May’s Industry News Update

What is going on lately in the Real Estate Industry?

Rising costs for lumber and other materials are causing new home contracts to be canceled, according to the National Association of Homebuilders.
Lumber costs have surged more than 170% over the past year, adding around $24,000 to the cost of a new home.
And that’s not the ONLY material increasing….
Concrete, metal products, appliances, and other expenses are also increasing due to supply chain disruptions caused by COVID-19 shutdowns.
The problem of higher materials costs is being compounded by a rise in mortgage rates. The rate on a 30-year fixed mortgage has risen by 30 basis points over the past month to a seven-month high of 3.24%. Rates hit a record low of 2.85% in November.
Pushing the first-time home buyer out of the an already competitive and EXPENSIVE market, with every increasing prices.

Originally, Maxine Waters sponsored a discussion draft bill to give first-time homebuyers who were also first-generation homeowners up to $25,000 in a grant they could use for down payment assistance.
NOW…..IT is almost a mirror image of the 2008-2009 tax credit:
- The Obama administration enacted the federal first-time homebuyer tax credit in 2008. Created as a response to the 2008 financial crisis, the Housing and Economic Recovery Act (HERA) allowed new homebuyers to get a tax credit of up t0 $7,500 during the first year of the initiative.
Biden’s $15K first-time homebuyer tax credit now a bill:
- The First-Time Homebuyer Act would provide a tax credit of up to 10% of the purchase price, or $15,000. And it is a refundable tax credit — not cash at the closing table.
- My opinion, this is NOT the answer.
- Literally, throwing GAS on a LIT FIRE!
- We need supply, not MORE demand – more buyers flooding the market.
That combined with the RISE in building costs:
- Increase of aprx. $25,000 per new build
MY opinion, this will continue to INCREASE prices
Speaking of a inventory issues…..

We have more AGENTS than ACTIVE listings (excluding all leases):

1,803 active RESIDENTIAL listings
2,952 Agents (aprx)
2010 – aprx. 1,600 Agent with 13 months of inventory
- Remember when seller’s paid closing costs?

	Total Listed	Num Sold	Avg. List Price	Avg Sale Price Sold	Avg DOM Sold	Avg List Price Unsold	Pct Expired	Sale Price or List Price Ratio
2010	10,393	4,565	$215,071	$206,347	143	$281,110	35.54%	95.94%
2020	10,586	9,439	$378,807	$378,184	83	$489,833	7.28%	99.84%

SUPPLY vs. Demand:

We still need supply – A LOT MORE to catch up with the demand
Market will continue to be strong until we see a balance
Rate are low; therefore, BUYING POWER remains strong!!
They hit BELOW 3 today for the first in 3 months!
And the Proposed New homeowner tax credit WILL NOT help an already buyer-saturated market. You’re creating more of an issue.
Great time to be a SELLER!
Yesterday, David Ramsey said, this is not a bubble. It is a great time to buy and a great time to sell.

Agents and lenders; keep an eye out on buyers in contacts on new builds – things change, that is part of the risk of a new build. Cost will be a factor
While rates are rising; they are still low BUT we need to keep the consumer confidence UP!

Affordable housing and multifamily units will suffer greatly, due to this increase.
And that is your middle America folks, lower income, first time home buyers, etc.
Essentially squashing affording single family homes
Support your National Home Builders Association – get involved on a local level or local association
Watch our administration, write your local officials:
Hopefully, the NAHB can put enough pressure and EXPOSURE to this issue, in hopes we can make some QUICK adjustments in our market.