Low-interest rates keep housing demand high while available supply continues to dwindle. Today’s market is tough on buyers yet it is still a great time to buy; so we must continue to encourage them. And we must do the same for the sellers as well.
Stories of 75 offers in one weekend or a fixer selling as-is for $50,000 over asking come almost daily. Real estate is not for the faint of heart nor is it boring.
Real estate is dominating many headlines; from the low-interest rates, low inventory, high demand, big news at Zillow, another commission lawsuit, national policy changes, to CFPB leadership changes there is a lot going on!
The frequency in which I am asked, “Is real estate headed for a crash?” is increasing, by a lot. Given the enormity of uncertainty we have lived with for nearly a year, the question isn’t surprising. Things are going well in real estate and with the limited good news, it is easy to wonder when the other shoe will drop.
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.
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.
The way we look at information matters. The big picture or 35,000-foot view is very different from the more focused picture or 15,000-foot view which is very different from the detailed picture or 1,000-foot view. Each view is important and together they illustrate a complete story. For example, in 2008, when the subprime mortgage-backed securities failed, it took down the stock market, which then caused your neighbor to ask you whether they should do a short sale or let the bank foreclose on their property. Real estate is national and hyper-local at the same time. National influences what happens locally.
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.”
