A look back at the first few weeks of 2021 and the national real estate market shows that home sales and the number of buyers increased in comparison to the last few weeks of 2020. Nevertheless, a low inventory of homes continues to create difficulty buying conditions for these would-be homeowners.
In an article published by CNBC.com, reported by Diana Olick, the housing market is compared to the beginning of 2020 where January 2021 is reported to have seen sales 23.7% higher than January of last year. According to the article, ‘“Home sales are continuing to play a part in propping up the economy,” said Lawrence Yun, chief economist for the NAR. “With additional stimulus likely to pass and several vaccines now available, the housing outlook looks solid for this year.”’
However, the availability of homes, in comparison to January 2020, was down 26%. This reported 1.9-month supply, compared to a January 2020 3- month supply, is the lowest ever reported. Of course, the low housing inventory coupled with the continued demand has allowed the median home price to increase a little over 14% since last January.
The article goes on to report new home sales and how builders have benefited from the shortages but also face supply and labor issues. Read the entire article.
Real Estate professionals and publications have recently began to educate home owners and potential home buyers with current market trends. The common message is that there is an increase in home buyers but the supply of homes for sale is declining. The natural consequence of this low supply and high demand situation is for home prices to increase. The projected home values are continuing to increase, in fact experts have even adjusted their projections based on current market reports. According to an article published in The Patch, “CoreLogic increased their 12-month projection for home values from 4.5% to 5.6% over the last few months.”
Naturally, buyers become concerned that home prices are causing them to be priced out of a home or a neighborhood. However, the increase in home prices can’t be analyzed in a bubble. Other factors must be taken into account to determine whether or not increasing home prices are really making homes unaffordable.
In the article, written by Keith Kreis, other factors that should also be taken into consideration are discussed. For example, mortgage interest rates have dropped since the beginning of 2019 which has increased home affordability by almost 10 percent. Additionally, American workers are seeing wage growth by as much as 1.5% since last fall. By taking these additional economic factors into consideration, one might argue that, at this point in time, buying a home is more affordable than its been.
Read the entire article.
Could a housing market slowdown, or worse a housing market crash, be looming? If Lawrence Yun’s, National Association of Realtors chief economist, analysis is correct, the answer is a resounding “no”. In fact, the slowdown in the housing market that some areas are experiencing is due to “insufficient supply”, not a lack of demand by buyers.
In an article published by Realtor Magazine, many positive signs for the housing market are present. For example, the article states “home price growth remains strong in markets across the country—about 5 percent on a nationwide basis so far this year”.
However, the negative effect of the lack of housing supply is that the prices are being driven into price ranges that price some buyers out of the market. A solution to that issue,the article notes , would be to have builders increase the supply of homes available.
Read the entire article.