As of Monday, total single family homes available in the US dropped down to 388,678. That means that only 0.05% of all single family homes in the country are available. With NAR’s 1.4M members, there are 3.5 Realtors for every house for sale.
New listings are under contract in a matter of days. We are not at the peak, prices will rise probably all the way through 2021. You have time, markets move slowly. Things change over the course of years. Prices in 2021 will continue to rise most likely throughout the year. May slow down as demand wanes with rising prices.
Looking back at 2020, no one expected residential real estate to be the sector to save our economy. The years of underbuilding came to a head as demand increased fueled by record low mortgage interest rates. Existing homes appreciated by 17% in Greater Phoenix.
Experts forecast a stabilizing housing market for 2021. A stable housing market is good. It is expected that inventory will rise and prices will continue to increase, only at a slower rate. This is not a collapse, it is normalization and it is the path towards stability. Be mindful of the fear-mongering headlines, no bubble, no collapse, no foreclosure crisis. In 1710, writer Jonathan Swift wrote, “Falsehood flies and the Truth comes limping after it.” Somethings never change.
2021 talking point: forbearance expiration, foreclosure moratorium expiration, and affordability. New listings are up 6% so far in Q4 2020. November new listings were up 2% year over year. November sales were up 26% year over year. Under contract up 28% year over year. Luxury is a huge part of the increase. 2020 has been a rollercoaster. Any stability in 2021 will be welcome.
To say that these are times are weird would be an understatement we have confusing elections, a worldwide pandemic, high unemployment, and the residential real estate sector is supporting the US economy.
Over 68 million Americans have already voted and we will see that number grow exponentially in the next few days as we approach what seems to be the most contentious election yet. I researched how Republican and Democratic administrations impact housing and the economy and was somewhat surprised by my findings; the President’s political party influences housing and the economy even less than I initially thought. And real estate’s relationship with the President and Congress is based almost entirely on policy created by both sides of the aisle.
During recessions housing always does well, except when the recession is caused by housing. Despite external pressure, real estate continues to amaze economists and industry experts alike. Stay mindful of the misleading headlines and continue sharing current information with your clients. Logan Mohtashami wrote, “Stay positive, healthy and safe – and try not to create problems for yourselves by buying into boy-band folklore and fairytales.”
Residential real estate is outperforming the rest of the economy. The strong market going into the pandemic combined with historic low interest rates enabled to us to get here. We learned that these low rates trump COVID and our home is our castle. Despite the unexpected growth we are experiencing today, many experts are seeing warning signs around future affordability.
Last week a client told me about an acquaintance of hers who had received their 3-month forbearance letter stating they now owed their lender $8,000. They got scared and sold their home to Opendoor. They did not know they had extension options or the ability to stay in their house. There is an extreme lack of information being shared on forbearance.