Almost 45% of Homeowners are Now Equity Rich

229 NW Flagline Drive, Bend, OR 97703
Presented by The Vandenborn Group | Offered at $1,395,000 | MLS# 220141716

From housingwire.com

Soaring home prices continue to serve existing homeowners, with nearly 45% of all property owners now considered equity rich, a year-over-year jump that boosted 13% more homeowners into the prime position.

A homeowner is considered equity rich when they have at least 50% equity in their home, a feat more easily accomplished when skyrocketing home price appreciation widens the gap between what someone owes on their mortgage and the value of their house.

About 44.9% of mortgaged residential properties in the first quarter of 2022 had at least 50% equity in their property, according to ATTOM. The portion of mortgaged homes that were equity rich rose from 41.9% in the fourth quarter of 2021 and from 31.9% during the same period in 2021.

“Homeowners continue to benefit from rising home prices,” Rick Sharga, executive vice president of market intelligence for ATTOM, said in a statement. “Record levels of home equity provide financial security for millions of families, and minimize the chance of another housing market crash like the one we saw in 2008. But these higher home prices and rising interest rates make it extremely challenging for first time buyers to enter the market.”

In the first quarter of 2022, just 3.2% of mortgaged homes, or one in 31, were considered seriously underwater – meaning the owner owed at least 25% more than the property’s estimated market value. While that figure is largely unchanged from the 3.1% of seriously underwater homes in the prior quarter, it was a marked improvement from 2021’s 4.7%, or one in 21 properties.

The decade-long housing marketing boom, which continued from late 2021 into early 2022, largely has been attributed to the rise in home equity. But across the country, the median home price rose 2% during that period – to another record of $320,500, according to ATTOM. Market analysts say a glut of home buyers chasing a historically tight supply of properties also brought up prices even higher.

ATTOM expects the latest home equity trend to slow in the remaining months of this year.

“It’s likely that equity will continue to grow through the rest of 2022, although home price increases should moderate as the year goes on,” Sharga said. “Rising interest rates, the highest inflation in 40 years, and the ongoing supply chain disruptions due to the war in Ukraine are likely to weaken demand and slow down home price appreciation.”

Nationwide, 45 states saw equity rich levels rise from the fourth quarter of 2021. However, at the same time, the percentage of mortgaged homes that were seriously underwater increased in 28 states.

Idaho had the highest level of equity-rich properties with 68.8%, while Vermont (68%), Utah (63.6%) and Washington (60.9%) followed. Meanwhile, Mississippi ranked first for having the country’s biggest portion of mortgages seriously underwater at 17%. It was trailed by Louisiana (11.3%) and Wyoming (10%).

Full article at housingwire.com


New-Home Construction Improves Despite High Inflation, Rising Mortgage Rates, and the Shortage of Skilled Labor and Materials

19196 Gateway Loop, Bend, OR 97702
Presented by Jennifer Winans & Sarah Billeter | Offered at $1,749,000 | MLS# 220140435

From realtor.com

The numbers: U.S. home builders started construction on homes at a seasonally-adjusted annual rate of roughly 1.79 million in March, representing a 0.3% increase from the upwardly-revised figures for the previous month, the U.S. Census Bureau reported Tuesday. Compared with March 2021, housing starts were up nearly 4%.

Permitting for new homes occurred at a seasonally-adjusted annual rate of roughly 1.87 million, up 0.4% from February and 6.7% from a year ago.

Economists polled by MarketWatch had expected housing starts to occur at a median pace of 1.73 million and building permits to come in at a median pace of 1.82 million.

What happened: Single-family starts and permits declined compared with both the previous month and March of last year. Every region saw declines in these figures between February and March, aside from the Midwest where new single-family construction rose 7%.

Consequently, multifamily housing projects prevented both housing starts and building permits from declining. Permits for the construction of housing projects with five or more units rose 11% since February, and were up nearly 34% from the same time a year ago. Similarly, multifamily starts climbed 7.5% on a monthly basis and 28% from a year ago.

The construction backlog continued to grow, as the number of housing projects under construction rose 2.3% from the previous month and 24% from a year ago.

Looking ahead: “The shortage of skilled labor, materials, and lots are persistent headwinds to increasing the pace of new construction. According to the February housing starts report, the number of single-family homes authorized but not started was nearly 25% higher than one year ago because of supply-chain disruptions,” said Odeta Kushi, deputy chief economist at title insurer First American.

“Even with rising interest rates and ongoing issues surrounding geopolitical stability, supply chain issues, and inflation, the overall lack of inventory over the past year has continued to drive demand for more housing starts as builders continue to try to push inventory to market,” said Kelly Mangold, a principal with RCLCO Real Estate Consulting.

Full article at realtor.com


Housing Inventory Uptick Expected Within 6 Months

202 G St, Gearhart, OR 97138
Presented by Nicki Whittle | Offered at $2,395,000 | MLS# 21055496

From housingwire.com

Nearly 65% of homeowners planning to sell this year expect to list by the end of summer, which should provide a much-needed influx of inventory that should slow the explosive home price growth seen during the pandemic, according to a Realtor.com survey of prospective sellers.

Realtor.com Wednesday released the results of the online survey of 3,000 consumers conducted in February by HarrisX. More than six in 10 prospective 2022 sellers said they intend to put their homes on the market within the next six months, suggesting some upcoming relief to one of the worst housing shortages in history, it found.

“While sellers are expected to hold the upper hand in 2022, navigating the listing process remains a challenge – particularly for those also buying in today’s fast-paced market,” said George Ratiu, Senior Economist & Manager of Economic Research at Realtor.com. “Homeowners who are ready to move forward with pandemic-delayed plans will find plenty of opportunity this spring and summer. Although accelerating inflation is leading to higher housing costs and living expenses, many buyers remain interested in finding a home. At the same time, recent housing trends suggest demand is beginning to moderate as higher mortgage rates push monthly payments out of some buyers’ budgets, underscoring the long-term need for more affordable inventory.”

Whether the nearly two-thirds of potential sellers follow through with their plans to list in spring or summer will prove integral to buyers hoping to make a purchase before interest rates inch up even higher, according to the news release from Realtor.com.

“In a positive sign that homeowners are serious about listing, many sellers are already getting their home ready. However, they’re doing so with great expectations of the current market, which means buyers should prepare for sellers asking for high offer prices, quick closes, waived contingencies and more,” it said.

Full article at housingwire.com


Inventory Hits 2021 High, Competition Remains Fierce

10720 S Moapa Ave, Portland, OR 97219
Presented by Matt Tercek | Offered at $1,599,000 | MLS# 21114701

From REALTOR® Magazine

Home buyers are finding more housing selections this fall, but they’re still up against some serious competition. Nearly one-third of the 50 largest metros saw increases in the number of newly listed homes compared to last year, according to a new report from realtor.com®.

“This September, buyers had more options than they’ve had all year and while that’s typical of early fall, that’s not what happened in 2020,” says Danielle Hale, realtor.com®’s chief economist. “Still, it’s important to remember that while buyers may have an easier time this fall than they did in the spring, the market remains more competitive than it has been historically at this time of year.”

“This September, buyers had more options than they’ve had all year and while that’s typical of early fall, that’s not what happened in 2020,” says Danielle Hale, realtor.com®’s chief economist. “Still, it’s important to remember that while buyers may have an easier time this fall than they did in the spring, the market remains more competitive than it has been historically at this time of year.”

The U.S. median home price continued to hold at August’s near record-high of $380,000. List prices are up 20.6% compared to pre-pandemic levels in 2019, realtor.com® notes. The top five markets with the highest price growth rate are in Austin, Texas (+33.6%); Las Vegas (+24.6%); Tampa, Fla. (+20.8%); Orlando (+16.9%); and Riverside, Calif. (+15.4%).

Some areas of the country are seeing more new listings added to the market than others. New listings have grown the most in competitive markets like Austin, Texas; Portland, Ore.; Jacksonville, Fla.; and Washington, D.C.—all with inventories up more than 10% year-over-year.

Meanwhile, the areas with some of the largest drops in newly listed homes in September tend to be in places that were affected by Hurricane Ida, including the Northeast (down 5.4%) and South (down 3.2%). New listings declined the most in the hard-hit area of like New Orleans, down 51.2%, according to realtor.com®.

Full article on REALTOR® Magazine


Inventory Insanity: The Secret Economic Forces Fueling the Housing Shortage

17930 Kelok Rd, Lake Oswego, OR 97034
Presented by Laura Piccard | Offered at $2,750,000 | MLS# 21518152

From Inman

Many consumers may not realize it, but they’re increasingly competing against institutional investors and contending with soaring building costs.

Agents are exhausted and consumers are stretched thin. But despite everyone being fed up, the ongoing housing supply shortage drags on with no end in sight.

As Inman has previously reported, the problem is multifaceted. The coronavirus pandemic, for example, has reshuffled job markets. And at the same time, a years-long building shortfall and wave of millennials hitting homebuying age has further exacerbated the problem.

But those aren’t the only issues. In fact, there are multiple other forces that have, perhaps inadvertently, conspired to make housing both more scarce and more expensive — but which are also largely off the radar of most consumers. Despite their lower profile, though, these forces are having a tremendous impact on the housing market right now.

For our purposes here, we’ll focus on two such forces: the soaring cost of building materials, and the spiking interest in housing among investors. Together, these two things are major contributors to today’s housing market, and the lack of inventory that is sweeping so many markets.

Building supplies are getting way more expensive

The cost of building supplies has been ticking upward for a long time now, but according to David Logan — a senior economist with the National Association of Home Builders (NAHB) — the pandemic made the problem worse. That’s because the companies that make things like lumber bet that there would be a “precipitous drop in housing demand” during the pandemic, and that bet proved to be wrong.

“Producers of lumber, they shut down like most every other business needed to,” Logan told Inman. “But when production came back, mills had curtailed their production by as much as 50 percent.”

Logan called this a “fatal mistake” on the part of lumber companies, in part because demand for housing itself has surged and in part because on top of that DIY home remodeling has also become more popular during the pandemic.

The result is a kind of triple whammy where supply is low, while demand from both contractors and everyday consumers is higher than ever. It’s no surprise then that, according to Logan, the cost of lumber has tripled since a year ago.

“I would say it’s certainly unprecedented in so far as a surge of demand unexpectedly coincides with a large decline in supply,” Logan added.

Just by February, the NAHB estimated that this trend had added more than $24,000 to the cost of a newly built single-family home.

Data from the U.S Bureau of Labor Statistics further bears this out, showing that the prices for plywood, lumber, veneer, pallets and various other items have jumped up recently.

Lumber may be the most prominent material impacted by this trend, but Logan also said it is “by no means the only culprit in this increase of the cost to built a home.” Other materials that have seen price increases include concrete, the oriented strand board (OSB) that is used in home wall paneling, and many other products.

Another NAHB report further notes that the price of steel mill products has jumped 22 percent in just the last three months.

The consequences of these price increases are far-reaching. In a series of reports, NAHB has revealed that contractors this spring are now having difficult conversations with their clients about the cost of materials, and that those costs are delaying critical home repairs. The costs are also cutting into the supply of affordable homes, especially in lower-cost suburbs where wood-frame building is the most common construction method.

Logan doesn’t expect these conditions to last forever, but in the meantime he said the prevailing sentiment among builders is one of “concern.”

Institutional investors are flocking to the housing industry

At the same time that building homes is getting more expensive, deep-pocketed investors are also snapping up more and more housing. Rick Palacios Jr., director of research for John Burns Real Estate Consulting, told Inman that right now investors are buying 20 percent of all homes in the U.S. Asked if that was enough to sway prices and housing supply, Palacios answered without hesitation: “yes.”

“That percentage gets even higher in a lot of markets,” he added. “Almost a quarter of all housing transactions are going to investors.”

Palacios pointed to Phoenix as an example, saying that nearly 30 percent of sales in the Arizona city are to investors. Las Vegas, Houston, and Tampa, Florida, also all have higher-than-average numbers of sales going to investors. Many of these markets also happen to be iBuying hotspots, and Palacios said firms such as Opendoor can end up having a major impact on the supply landscape in cities where they are active.

Of course, “investors” is a broad category. Palacios explained that it includes everyone from fix-and-flip operators to iBuyers to rental companies. But the result of all this interest among investors is that would-be homeowners are facing more competition and higher prices.

A report from John Burns Real Estate Consulting — which was provided to Inman — further teases this idea out, showing that investors have zeroed in on lower-cost homes. The report also notes that “cash purchases account for 67 percent of homes sold below $100k and 31 percent of homes sold between $100k and $200k.”

Some of this investor activity makes obvious sense. Given that there is a supply shortfall, as well as soaring prices, flippers stand to make a significant profit by simply buying houses and then selling them a short time later. Palacios said places like Phoenix and Boise, Idaho, are ideal backdrops for that kind of activity.

Interest from landlords, on the other hand, may be slightly less understandable given that right now they have to pay top dollar for their properties. That contrasts significantly from the housing bubble in 2008, when institutional investors were able to snap up thousands of houses at a relative bargain.

However, Palacios said that “there’s a global quest for yield” going on among investors right now. At the same time, yields from vehicles like U.S. Treasuries have tanked while investment in commercial real estate became unappealing thanks to COVID-related shutdowns of stores, restaurants and hospitality businesses.

Residential real estate, and especially single-family housing, looks relatively safe by comparison. And Palacios said recent years have ultimately offered a kind of proof-of-concept that shows this type of investment works. As a result, institutions like pension and sovereign wealth funds — which may have mandates to invest in U.S. real estate — have increasingly gravitated toward housing. And if they have to pay top dollar for the properties, so be it because they’re in it for the long haul.

“Today’s investors are investing for both quick appreciation as well as yield and safety compared to other alternative investments,” Palacios added.

The John Burns report further notes that investors have gravitated toward residential real estate as a hedge against inflation and in an effort to diversify their assets.

This trend may not be readily apparent to consumers or their agents. When someone loses a bidding war, after all, they may never find out exactly who won. But like rising material costs, it is happening in the background and having a big impact. And that impact is likely to stick around for the foreseeable future.

“Housing investors are going wild, again,” the report ultimately concludes. “Limited new and resale housing supply, low mortgage rates, a global reach for yield, and what we’re calling the institutionalization of real estate investors are setting the stage for a home price boom that could stretch on for years, similar to the early 2000s.”

Full article on Inman


Is It a Good Time to Sell My House?

61310 Meeks Cutoff Road, Bend, OR 97702
Presented by Sandy and John Kohlmoos | Offered at $1,199,000 | MLS# 220112580

From Keeping Current Matters

Last year, many homeowners thought twice about selling their houses due to the onset of the health crisis. This year, however, homeowners are beginning to regain their confidence when it comes to selling safely. The latest Home Purchase Sentiment Index (HPSI) by Fannie Mae shows that 57% of consumers believe now is a good time to sell.

Doug Duncan, Vice President and Chief Economist at Fannie Mae, explains:

“Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale.”

Normally, spring is the busiest season in the housing market – the time when many homeowners decide to list their houses. While this is obviously not a normal year since the pandemic is still very much upon us, experts are optimistic that consumer positivity around selling will lead to more homeowners making moves this year. Duncan continues to say:

“We will pay close attention to see if this newfound optimism develops into a trend.”

What does this mean if you’re thinking of selling your house?

The fact that there are so few houses available for sale today is one driver that’s encouraging consumers to think more positively about selling. The National Association of Realtors (NAR) states:

“Total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million).”

With so few homes available to buy, your house will be more likely to rise to the top of an eager purchaser’s wish list in this competitive market. Today’s high buyer activity is creating upward pressure on home prices and more multiple-offer scenarios. According to the Realtors Confidence Index Survey from NAR, the average home for sale is receiving 3.7 offers today, up from 2.3 offers just one year ago. This makes selling even more enticing.

In this kind of sellers’ market, you have a huge advantage in the process. And here’s another win – you can also use your equity toward a down payment on a new home when you move.

Wondering where you’ll go if you try to move while it’s so challenging to find a home to buy? Well, in many areas, there are more homes available at the higher end of the market, so finding a move-up home may be less of an issue if you’re ready to search for your dream home this spring.

Full article on Keeping Current Matters


New-Home Sales Jump 19% Annually

34155 NE Wilsonville Rd, Newberg, OR 97132
Presented by Jennifer Nash | Offered at $2,100,000 | MLS# 21492103

From Realtor Magazine

Sales of newly built, single-family homes in January moved 19% higher than a year ago, as home buyers sought more options under a lean number of existing homes for sale.

Newly built single-family home sales increased 4.3% last month over December 2020, reaching a seasonally adjusted annual rate of 923,000, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Wednesday.

“Historically low mortgage rates and solid demand spurred an increase in new home sales in January,” says Chuck Fowke, chairman of the National Association of Home Builders. “However, rising affordability issues are looming this year, particularly increasing building material costs, including lumber, which is adding $24,000 to the price of a typical newly built home. Builders also cite rising regulatory issues as a potential concern.”

As existing-home inventory remains at all-time lows, more buyers are considering new home construction, says Robert Dietz, chief economist of the National Association of Home Builders. “Though rising building and development costs, combined with recent increases in mortgage interest rates, threaten to exacerbate existing affordability conditions,” he says. “Builders are exercising discipline to ensure home prices do not outpace buyer budgets.”

Inventories of new homes also remain tight at just a four-month supply at the current sales pace. New-home inventories are 6.3% lower than January 2020.

The median sales price for a new home was $346,400 in January, up 5.3% from a year earlier.

New-home sales rose by the highest amounts in the Midwest last month, up 12.6% annually. New-home sales also posted a 6.8% increase in the West and a 3% increase in the South. The only region of the U.S. to post a decline in new home sales in January was the Northeast, where new home sales fell 13.9% annually.

Full article on Realtor Magazine


Single-family Housing Starts Reach Highest Level Since 2007

20377 S Shore Vista Dr, Oregon City, OR 97045
Presented by Brent Gunter | Offered at $3,195,000 | MLS# 20699003

From housingwire.com

According to reports from Census Bureau, single-family housing starts continued their seven-month climb in November, coming in to the highest level since 2007. Housing starts increased by 1.2% in November compared to October and increased by 12.8% year over year to a seasonally adjusted annual pace of 1.58 million starts. Single-family housing starts rose 0.4% from October and 27.1% compared to last year.

The Mortgage Bankers Association’s associate vice president of economic and industry forecasting, Joel Kan said that the report is consistent with other housing data showing that the housing market has substantially rebounded from Q2 of 2020. The demand for larger homes has strengthened because of the pandemic that led to more construction, home sales, and mortgage applications. He added that the permits for new single-family construction also rose to 2007 highs, potentially an indication that we might see the increase in homebuilding continue into early 2021.

Single-family authorizations in November were at a rate of 1.14 million, up 1.3% from the revised October rate of 1.12 million. Actual single-family housing completions dipped again in November, down 0.6% from October’s rate of 879,000 to 874,000.

First American’s Deputy Chief Economist Odeta Kushi said that the rise in housing starts is a welcome sign of new single-family inventory to come and that 2021 may be the year of the homebuilder.

Zillow’s Economist Matthew Speakman said today’s numbers showcase the enduring strength of the housing and homebuilding markets and that builders are overcoming the constraints that have limited activity in the last few months.

The National Association of Home Builders and Wells Fargo Housing Market Index measuring builder confidence faltered a bit this month after three months of record highs, falling four points to 86. But it’s still the fourth month in survey history the score broke 80.

Full article on housingwire.com