Real Estate Archives - Green Escrow Services, Inc

Relaxing zoning rules a solution to low inventory?

June 17, 2021 By Geoffrey Disch Leave a Comment

With housing inventory at historic lows due to a shortage of materials, high labor and material costs, and not enough land on which to build, many analysts are calling for a relaxing of zoning regulations.

According to some, even a modest change in large metro areas could add up to 3.3 million homes to available inventory.

Demand is expected to remain high as the economy continues to rebound. While many expect more homes to go on the market as the pandemic winds down, new construction will continue to be problematic.

Buyers frustration increasing

June 14, 2021 By Geoffrey Disch Leave a Comment

According to Fannie Mae’s latest Home Purchase Sentiment Index, only 35 percent of people surveyed believe that now is a good time to buy a home, down from 47 percent just last month. Conversely, 56 percent think that now is a bad time to in the market to buy a home, up from 48 percent last month.

Of course, high prices and low inventory are primarily responsible for this frustration. Toss in the inevitable bidding war and it’s easy to see why potential buyes feel the way they do.

On the other hand, there is growing optimism that the economy is recovering and that the pandemic is largely under control, at least in the U.S.

28 million Americans are ready to buy in 2021

June 10, 2021 By Geoffrey Disch Leave a Comment

According to NerdWallet’s 2021 Home Buyer Report, after a chaotic 2020, Americans are overwhelmingly optimistic about the future and 11 percent of those surveyed – roughly 28 million – say they’re ready to purchase a home!

On the other hand, given that the average number of homes purchased over the last five years is approximately 5 million per year, 28 million seems awfully high.

Throw in the fact that inventory remains very low and construction costs are skyrocketing, primarily due to the high cost of lumber, and many of those expectations will have to be managed.

But there’s always 2022…

What is a “resilient home”?

June 7, 2021 By Geoffrey Disch Leave a Comment

Given the drastic effects of climate change and the massive storm in Texas that left over 10 million without power, more and more homebuyers are looking for a house that can withstand such events.

Now some homebuilders are looking to construct smarter, more durable structures featuring solar panels, batteries, and other compoents that use less energy so they are not nearly as reliant on the grid. The homes are able to monitor their energy output. If power is lost for any reason, the homes will continue to operate normally for a period of time.

Of course,, the current cost of building these self-sufficient homes is very high but this is clearly the wave of the future.

The sellers market continues

June 4, 2021 By Geoffrey Disch Leave a Comment

Tight inventory, low interest rates, and pent-up demand combined to produce a sales price to list price ratio in the Bay Area of 108.2% in April. Five of the nine Bay Area counties saw a triple-digit increase in sales.

Rents and condominium sales continue to decline with the more expensive rental areas – San Francisco and San Jose – seeing the steepest decline. Analysts expect this trend to continue throughout 2021.

As of late May, the average rent for a one-bedroom apartment in San Francisco is $2,650 which represents is a 20 percent decrease compared to 2020.

Lumber prices continue to skyrocket

June 1, 2021 By Geoffrey Disch Leave a Comment

As if the low housing inventory wasn’t bad enough – especially in the Bay Area – a severe lumber shortage, made considerably worse by the pandemic, is slowing new home construction. A number of lumber mills closed for good during the Great Recession and the stay-at-home orders during the pandemic made the situation that much worse.

Lumber futures have increased by over 540 percent in a little over a year! Analysts say this will result in a $35,900 increase in the average cost of a new single-family home.

While lumber mills are finally amping up operations, experts warn that a shortage of imports from Canada and the high cost of diesel fuel – needed for logging trucks – will continue to have an adverse effect for the foreseeable future.

Buyers’ Tactics

May 27, 2021 By Geoffrey Disch Leave a Comment

With competition so fierce for the limited number of houses on the real estate market, some buyers are resorting to more aggressive tactics to influence sellers. One common practice is a “love letter” – a personal message from the would-be buyer to the seller to gain their favor. The National Association of Realtors (NAR) discourages “love letters” as they raise fair housing concerns.

Another tactic is the “preemptive offer” where a buyer submits a bid made before the seller’s designated date to hear all offers. This includes an “escalation clause” — where the offer guarantees to beat any other offer by a fixed amount up to a certain price. With homes currently selling to 103 percent of the asking price, this can be an effective technique although offers that are too high run the risk of far exceeding the appraisal.

Another shortage: furniture & appliances

May 24, 2021 By Geoffrey Disch Leave a Comment

As if the extremely low inventory of homes for sale wasn’t challenging enough, those lucky enough to actually a property are running into another shortage: furniture and appliances to put into their new home.

Not surprisingly, the pandemic had a strong effect on U.S> manufacturing as plants were forced to operate with fewer workers or staggered shifts. Likewise, furniture has been adversely affected for the same reasons and disruptions in supply chains.

Some buyers are even seeing to push back their closing dates so they’ll actually have something to put into their new home.

Leasebacks increasing

May 20, 2021 By Geoffrey Disch Leave a Comment

Leasebacks – or rent-backs – are becoming more and more common as sellers struggle to find a home to replace the home they’ve just sold. According to a report from Redfin, 60 percent of homes on the market go under contract within two weeks while 47 percent are sold within a week or less.

With such rapid movement and tight inventory many sellers are asking for a leaseback agreement after the transaction has been closed to give them more time to find a new home. In fact, many sellers won’t consider an offer unless a leaseback is part of the deal.

On the other side, buyers are waiving the leaseback fees or even offering free or discounted rent to sweeten their offer.

New homes now 25% of inventory

May 17, 2021 By Geoffrey Disch Leave a Comment

According to data from Redfin, new construction now accounts for 25.7 percent of single-family homes now on the market. Single-family starts were up 41 percent in March compared to 2020 while existing homes listed for sale dropped by nearly 28 percent during the same time period.

While purchasing new construction eliminates the worry of a bidding war, many developers are now using waiting lists due to the high demand.

Another downside is the rapid increase in the price of building materials, most notably lumber, which are adding considerable costs to the price of a new home.