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The National Association of Realtors (NAR) reports that sales of existing home rose by 1.4 percent in June, the first increase in 4 months. According to the NAR, inventory was up slightly to 1.25 million existing homes for sale – a 2.6 month supply, up form May’s 2.5 month supply.
Analysts also cited a slight softening in demand. Prices are expected to continue to rise throughout the year but the pace of appreciation should be slower by the end of the year.
According to Redfin, cash sales for home purchases in the U.S. were over 30 percent, the largest percentage since 2014. In 2020, cash accounted for 25 percent of home sales.
Analysts agree that remote work is largely responsible for this trend as high tech workers can sell their homes in expensive cities and move to more affordable areas where they purchase a home that’s twice the size for half the price.
The U.S. Treasury disbursed $25 billion to states for rental assistance in February. Congress then allocated another $21 billion in March. By the first of June only $1.5 billion of that money had actually reached renters – a total of 176,000 households.
With the federal moratorium on evictions set to expire at the end of July, a huge number of renters could be facing eviction. It is estimated that 11.5 million or 16% of all renters have fallen behind on their payments.
Okay, “stabilizing” might be a bit strong but a certain equilibrium seems to be finding its way into the real estate market. Housing permits. starts, and completions were all up significantly in June, even as April and May saw completions beating expectations by as much as 16 percent.
In addition, higher offers in bidding wars decreased by 10 percent in June as compared with April.
Analysts are hopeful that the combination of lower demand and greater supply will gradually ease home prices without a sharp rise in interest rates.
As the pandemic eases, rents in the Bay Area are slowly increasing, although they remain below pre-COVID levels for the most part. Over the last three months, San Jose has seen an increase of 2.9 percent, while Oakland is up 3.6 percent and San Francisco 5.3 percent.
Some analysts believe that rents may never return to pre-2020 levels because many who left the Bay Area during the past year will not return.
Even with the downturn in rental rates, Bay Area cities remain among the six most expensive areas in which to live in the nation.
It is estimated that as many as 575,000 homeowners will have their forbearance plans expire in late September or early October. Mortgage providers have been adding staff and plan to be creative in assisting borrowers who are still struggling to pay their bills.
As many as 7.25 American homeowners took part in forbearance programs at some point during the pandemic. Approximately 72 percent of those have already exited the programs.
Some are calling it “homebuyer fatigue” as home sales dropped 7.4 percent from April to May throughout the Bay Area. This, of course, is not the normal trend for this time of year.
For the houses that are on the market, the bidding remains fierce with some offers coming in as high as 30 percent over asking price. Still, agents see many would-be buyers being priced out of the marketplace and an ever-growing divide between the tech & non-tech professionals.
Low interest rates, low inventory, high construction costs, a reluctance to sell, a surging economy, millennials looking to buy and many other factors are keeping the real estate extraordinarily hot throughout the entire country. Still, there are a number of indicators that the strong sellers market may be easing.
Higher interest rates may be coming sooner than expected as the Federal Reserve keeps a close eye on inflation. Buyer confidence that this is a good time to buy a home is dropping (4 percent in the last month) while pother buyers are giving up.
if the high construction costs and labor shortage continue the number of homes on the market will continue to decrease.
While home prices continue to climb, the good news is that the number of homes for sale nationwide increased by 3.9 percent in May, only the fifth gain on a month-by-month basis in the last 2 years.
Within the fifty largest markets in the U.S., only six saw housing inventory fall from April. However, in keeping things in perspective, the number of home on the market is down 31.2 percent from May 2020.
According to analysts, most of the increase in inventory is due to an increase in new construction activity.
According to a recent report in the San Francisco Chronicle, housing inventory has actually increased in San Francisco (25.6 percent from May 2020) and San Jose (30.3 percent from May 2020). This, of course, is contrary to rends in other parts of the country.
However, there are a few caveats to this: last ear inventory was so low that there was bound to be an increase. Also, despite the higher inventory, prices have climbed at a high rate as demand remains strong.
Rental rates are also increasing with small but steady rises over the last several months.
