Key Highlights
- Supply showing signs of let up
- Rents rebounding
Supply May Be Opening Up
It’s no surprise that housing supply has been a market driver for a long time. Just look at how difficult it is for buyers and investors to find properties, price surges and a spike in bidding wars.
According to data from Housing Tides, the US has only a 1.6-month supply of home, far from the normative “balanced” market supply of 6-months.
The good news regarding supply issues is that there may be a light at the end of this strangling tunnel. A Zillow survey of over 100 economists indicated that 43% of survey participants anticipate inventory to grow in the second half of 2021 and 26% expect inventory growth in early 2022.
More than predictions, however, real data from realtor.com showed that new listings were up +40% in the last week of April.
Competition To Remain Tight
Due to this strangling inventory, Redfin indicated that almost two-thirds of buyers faced bidding wars in April. And, it’s not uncommon in some areas for sellers to receive +80 offers on a listing within the first week on the market.
Buyers looking at new investment property most definitely have to go the extra mile…waive contingencies, pay in cash if at all possible, lease back the property to its seller owners at no or little cost, etc.
Prices Will Continue Skyrocketing
For the ninth consecutive month, home prices have continued to increase while price gains have reached the highest level since February 2006.
According to the latest S&P CoreLogic Case-Shiller Home Price Index, prices were +12% higher y/y as of February 2021. Some of the nation’s hottest markets are seeing prices increase to levels in the high/mid-teens such as +17.4% price increases in Phoenix. Even in pandemic-battered urban areas, single-family homes and condos have seen an almost +20% y/y price jump.
Rent Relief S-L-O-W in Coming
Despite Congress setting aside billions of dollars for rent relief that would help both renters and landlords, states have been snail-slow in implementing standards and issuing funds to those in need.
In Texas, for example, only 3% of available funds have been distributed. Oregon has distributed just 12% of its rent relief funds.
Only time will tell when landlords and renters might get the assistance they so desperately need.
Rents Rebounding
The silver lining in the world of rentals is that big city rents are turning around, according to ApartmentList.
Nine of ten hardest-hit cities have seen rents go up since January 2021. Even though rents have not yet climbed back to pre-pandemic levels, declines are shrinking.
As ApartmentList’s National Rent Report indicates, “The market has clearly turned a corner.”
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