Some Highlights

• The amount of wealth Americans have stored in their homes has increased astronomically.
• On average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000.
• When it’s time to sell, your home equity can help accomplish your goals. Let’s connect to discuss how you can take advantage of today’s sellers’ market to get the most out of your home sale.

There’s no denying we’re in a sellers’ market. With low inventory and high buyer demand, homes today are selling above the asking price at a record rate. According to the latest Realtors Confidence Index Survey from the National Association of Realtors (NAR):

• Homes typically sell within 17 days (compared to 26 days one year ago).
• The average home sold has five offers to pick from.
• 54% of offers are over the asking price.

Because so many buyers are competing for so few homes, bidding wars are driving up home prices. According to an average of leading expert projections, existing home prices are expected to increase by 8.9% this year.

Yet even in today’s red-hot sellers’ market, it’s important to price your house right. While it may be tempting to price your house on the high side to capitalize on this trend, doing so could limit your house’s potential.

Why Pricing Your House Right Matters

Here’s the thing – a high price tag doesn’t mean you’re going to cash in big on the sale. While you may be trying to maximize your return, the tradeoff may be steep. A high list price is more likely to deter buyers, sit on the market longer, or require a price drop that can raise questions among prospective buyers.

Instead, focus on setting a price that’s fair. Real estate professionals know the value of your home. By pricing your house based on its current condition and similar homes that have recently sold in your area, your agent can help you set a price that’s realistic and obtainable – and that’s good news for you and for buyers.When you price your house right, you increase your home’s visibility, which drives more buyers to your front door. The more buyers that tour your home, the more likely you’ll have a multi-offer scenario to create a bidding war. When multiple buyers compete for your house, that sets you up for a bigger win.

Bottom Line

When it comes to pricing your house, working with a local real estate professional is essential. Let’s connect so we can optimize your exposure, your timeline, and the return on your investment, too.

If you’re thinking of buying a home, there really is no time like the present. With today’s low mortgage rates, you have a great opportunity to get more home for your money. The challenge is inventory. Like you, many buyers want to capitalize on these market conditions, and it’s leading to more buyer competition and bidding wars.

If you’re having a hard time finding a home to buy, it may be time to talk to your trusted real estate advisor about a newly built home. Early indicators show new-home construction is beginning to ramp up. While new homes alone won’t be able to fix all of the inventory challenges, this does mean you’ll soon have more options as you search for a home. As a buyer, a newly built home may be exactly what you’re looking for – it’s brand new, and with builder customization options, it’s uniquely yours from the ground up.

Here’s what industry experts are saying about new homes coming to market:

Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says recent research could indicate upward momentum when it comes to new home construction. Evangelou refers to the volume of new homes where construction began during a set period, known in the industry as housing starts.

According to that research, housing starts reached their highest level since 2006 in March of this year – an encouraging sign for the industry. While they dipped slightly in April, Evangelou reiterates that the level of housing construction is heading in a positive direction compared to recent years:

“…we are currently building 24% more homes than we typically have built in April in the last couple of decades. Thus, housing construction is trending upward with housing starts likely to reach 1.6 million for all of 2021 and rise further to 1.7 million in 2022.”

As new data pours in, it further confirms this trend. According to the latest Monthly New Residential Construction report from the U.S. Census Bureau, housing starts increased even more in May, which continues the ongoing upward trend (see graph below) and indicates that ground is being broken on even more new homes.Robert Dietz, Chief Economist and Senior Vice President of Economics and Housing Policy for the National Association of Home Builders (NAHB), singles out another encouraging sign:

“It is also worth noting that the number of single-family homes permitted but not started construction continued to increase in May, rising to 142,000 units.”

This insight that there’s also an uptick in single-family homes permitted serves as an additional sign that more new homes lie ahead. It’s important to realize that the construction doesn’t have to start on these homes before you may be able to purchase one. According to the Monthly New Residential Sales report from the U.S. Census Bureau, many new homes are selling before construction even begins (see graph below):These signs are all good news for housing inventory. And as the recent challenges of rising lumber prices and dwindling lumber supply begin to improve, builders will be able to increase their production even more in the months ahead.

Bottom Line

While the inventory challenges we’re facing today won’t be solved overnight, the increase in new-home construction means your house may have more competition in the market. Let’s connect to talk about finding your dream home and the newly built homes available in our area.

The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of conversations – and everyone has an opinion. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise.

Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.

The Joint Center for Housing Studies in their The State of the Nation’s Housing 2021 report:

“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”

Nathaniel Karp, Chief U.S. Economist at BBVA:

“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”

Bill McBride of Calculated Risk:

“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.”

Mark Fleming, Chief Economist at First American:

“Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…

Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”

Bottom Line

All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.

At 12:01am today, most of the state’s COVID restrictions were lifted pursuant to the Governor’s latest executive order. This includes the lifting of the statewide mask mandate, capacity limitations for businesses and other venues, and physical distancing requirements. Masks will still be required in some settings such as public transit and certain health care settings. The Oregon Health Authority will be taking down much of its guidance and replacing it with best practices. 
Local jurisdictions and businesses may continue to operate with their own health and safety policies in place and everyone is encouraged to continue to follow guidance from the CDC on slowing the spread of COVID-19 which includes mask wearing for unvaccinated individuals.