What is going on lately in the Real Estate Industry?
Check out this month’s update from the desk of Laura Piatt, Ticor Title Mid-Valley Sales Manager
Homebuyers canceling contracts as lumber costs CONTINUE soar…..Increasing of mortgage rates are not helping either.
Let’s talk about it!
- 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.
Biden’s $15K first-time homebuyer tax credit now a bill
- 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…..
A little WVMLS reporting:
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?
10 Year WVMLS Comparison –
| 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% |
Laura’s predictions……
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.
Wrap Up:
- 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!
In the end…
- 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.
