Where’s the inventory? When will the market change? What can I do? How can I take 3 listings immediately without spending any money?
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Fact: Inventory of available homes for sale is at an all-time low. Year over year, active listings have decreased 20 to 50% depending on your city. Active listings are hovering at about 410,000. Yet more than 6 million homes sold last year. What are you doing to proactively find sellers who wish to sell?
As we have often reminded you, the market is not headed for an apocalyptic crash, raining discounted inventory on your town. Here’s why:
1 – Demographic demand. According to NAR, 45 million Millennials (ages 26 to 35) are ready to make a move this year. Rental payments are outpacing mortgage payments by 7.1%. Only 5% of rentals are even vacant, keeping supply down and payments high. FOMO or Fear of Missing Out is still playing a big role in the desire to purchase, especially before rates inch higher and higher.
2 – Builders can’t keep up. The cost of materials has tripled for lumber, increased 22% for steel and many manufacturers are behind on shipping critical components. From toilets to refrigerators, the creation and delivery of these items are behind. Even paint is hard to get. Nationwide, the average cost to build a house is up to $24,000 on average.
Reminder, you promised yourself you would become a HARRIS Coaching client. You are done wasting time and ready to follow a proven path. Now, while you are here make the next natural step and join the 1000s of other agents as a HARRIS Real Estate University coaching member. No more waiting or procrastinating. Join now. Here is the quick and simple enrollment.—-> YES, Enroll Me Now In Premier Coaching. I WILL make NOW my best year ever!
3 – Institutional investors are gobbling up anything under $300,000 and almost always paying cash. In Phoenix for example, fully 30% of recent sales have gone to investors, either iBuyers or small investors. Flippers are also buying in these price ranges.
4 – The coronavirus pandemic is a short-term component stacked upon the long-term trend we discussed in the previous 3 points. People want more space, more privacy and now have the freedom to move markets due to flexible work environments.
5 – Low-interest rates continue to add fuel to the fire. Today’s rate is 3.4% for a 30 year fixed, which is still extremely low. The highest mortgage rates ever were in 1981 and were over 18%. People still bought houses. A $500,000 home financed with 20% down at 3.4% has a payment of $2417. If that rate rises to 4.4% the payment will be $2,670. That same house would likely rent for $3500/month, depending on the market, and that’s if you can even find something to rent.
6 – Record rates of savings in the US and a huge number of all cash transactions. Baby Boomers have on average $152,000 saved, Generation X, $66,000, and Millennials $23,000.00. Stimulus money has accounted for 15% of first-time buyers’ down payment money. Americans have currently saved more than any other time in history, a combined $2.7 trillion.
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