Good Morning!
Boom or bubble? That is a frequently asked question about the
state of the real estate market. According to Frank Nothaft, CoreLogic chief
economist, and many experts, the market has a more boom like appearance than
bubble driven by simple supply and demand. The demand has been driven by record
low mortgage rates. Supply, or lack of it, is a result of the U.S.
underbuilding its housing needs by at least 5.5 million units over the past 20
years according to the National Association of Realtors This Week in Real
Estate. There are signs of a moderating market as 17.3% of active
inventory have made a price adjustment; the highest share in 21 months. While
inventory was down 25.8% year-over-year in August that was an improvement from
33.5% in July. Below are a few newsworthy events from the first week
of September that influence our business:
* Here’s Why
Experts Believe The U.S. is in a Housing Boom and Not a Bubble. “You can see in just basically the last 15 months or so, we’ve
seen a dramatic acceleration in home price growth to levels we haven’t seen in
decades,” CoreLogic chief economist Frank Nothaft said. However, according to
most experts, the market is shaping up to look more like a boom rather than a
bubble. “We say bubble because we can’t believe how much prices have gone up,”
CNBC real estate correspondent Diana Olick said. “A bubble tends to be
something that’s inflated that could burst at any minute and change and that’s
not really the case here.” While speculation certainly is a factor, the main
cause for the current housing demand is low mortgage rates. At the start of the
pandemic in March 2020, the 30-year fixed-rate mortgage rate sat at 3.45%.
By July of this year, that number had dropped to 2.87%. Supply is also an
issue. According to the National Association of Realtors, the U.S. has
underbuilt its housing needs by at least 5.5 million units over the past
20 years. That’s a stark comparison to the previous housing bubble in 2008 when
overbuilding was the issue. “So we’ve got a boost in demand that’s due to
record low mortgage rates and we’ve got a shrinkage of supply,” Nothaft said.
“So between more demand and less supply, prices are up and they’re up at the
fastest pace since the 1970s.”
* New Listings Jump 5.1%; Price
Adjustments Moderate. More homeowners are listing their homes
for sale, which is opening up options for anxious home buyers who have faced
fierce competition the last few months over a limited housing stock. New
listings rose 5.1% in the 50 largest metros. As more inventory and new listings
arrived on the market in August, the rate of sellers making price adjustments
has also begun to approach more normal levels, realtor.com notes. The share of
sellers who made listing price adjustments grew to 17.3% of active inventory,
which is the highest share in 21 months and close to more typical levels that
were seen between 2016 to 2019, researchers note. Still, housing remains tight,
even if with the additional inventory. U.S. housing inventory was down 25.8%
year-over-year in August. That did mark an improvement over last month when
inventories were down 33.5% annually. Meanwhile, new listings were up 4.3%
compared to a year ago.
Full
Story…
https://magazine.realtor/daily-news/2021/09/03/new-listings-jump-51-price-adjustments-moderate
* Mortgage Rates
Stuck in a Rut at 2.87%. The average 30-year
fixed-rate mortgage was flat at 2.87% for the week ending in Sept. 2, according
to mortgage rates data released Thursday by Freddie Mac‘s PMMS. According
to Sam Khater, chief economist at Freddie Mac, mortgage rates have held steady
as economic growth and rising prices in goods have cooled. He predicted that
those factors will also moderate home-price growth. “Economic growth and the
acceleration in inflation have moderated in the last month, giving the markets
comfort and leading to a stabilization in mortgage rates,” said Khater.
“Heading into the fall, home purchase demand is stable, home sales remain firm
and above pre-pandemic levels, and inventory of unsold homes is tight but
improving modestly. These factors will allow for home price pressures to ease
over the remainder of the year.” Mortgage rates have stayed stubbornly low for
most of 2021, defying expectations they would rise significantly. The low cost
of financing is supported by the Federal Reserve’s continued, aggressive
monthly asset purchases. Last week, in a virtual address at the annual Jackson
Hole, Wyoming economic symposium, Federal Reserve Chair Jerome Powell indicated
that the central bank would continue its asset purchases at the current pace
until “substantial further progress” is made toward employment and price
stability goals. The central bank previously signaled it would begin to taper
its $120 billion in monthly purchases of U.S. Treasury bonds and
mortgage backed securities by November.
Full
Story…
https://www.housingwire.com/articles/mortgage-rates-stuck-in-a-rut-at-2-87/
Have a productive week.
Jason
Comments
Post a Comment