Here’s the housing market snapshot I sent out last week to my clients. The giddiness I commented on back in June has abated, and the fundamentals of the market seem very sound. Supply chain issues are topical, not least in the housing market, where available inventory for frustrated buyers remains – and will remain – very scarce.
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Housing Market in October, 2021
Here’s my brief snapshot of the housing market in October of 2021.
Bottom line, not much is changed since my previous one in June of this year. The market is cooling, as we all know, but the fundamentals remain consistent, and transparent. The mechanism of the market, in my view, is working exactly as it should, indicating a strong and healthy housing market.
And the Snowbirds are returning!
The Canadian border will open in November to allow our cooped-up neighbors to the north to fly south this winter and rediscover their warm retreats. After some 19 months of separation, that’s a lot of pent-up desire heading this way and all I can say is, “Welcome Back, Snowbirds!”
CoreLogic has a recent report showing the amazing surge in equity of US homes over the last year. Mortgage-holders saw close to a 30% gain in home value year-over-year by Q2 of 2021. This was not great news for prospective buyers, except to show an unrigged market where supply and demand still work exactly as they should.
The equity gain continues to support homeowner refinancing for property improvements, and this in turn will push the shortages of building supplies. New homes are increasing in price from supply-chain shortages (and inflation), and this will continue to add upward pressure on values of existing homes.
The cushion of rising equity has undoubtedly floated some homeowners above the mark of being upside-down on their mortgages. And the long anticipated time of potential foreclosures is now upon us, but without the great wave of disaster that seemed possible in the beginning. In typical times, there are around 40,000 foreclosures per month in the USA. Currently we’re at half that number, at almost 20,000 foreclosures, and analysts don’t expect the number even to approach normal – we are still far below the normal foreclosure rate.
Nationwide, home equity is at record levels, and it’s hard to say that this is unrealistic. Inflation is very real, inventory is very tight, America is short of needed roofs by several million homes, and buyers are out there wanting home ownership.
Activity has cooled as the kids have gone back to school. Buyers backed away from bidding wars, and some over-confident sellers had to adjust their inflated asking prices down to what would actually appraise. It was a giddy summer, and that always speaks of bubbles forming, but things seem pretty calm right now, and I think everything is about where it should be. In all, I think the housing market is showing well. The national economy remains the greatest uncertainty, and how well the Fed can keep interest rates stable. So we’ll see what spring brings – I’ll let you know.
I hope you’ll enjoy the holiday season.
Talk soon!
