The trifecta of inflation, rising interest rates and low inventory makes for a unique real estate market for many buyers. This short NPR story provides insight into the nuance of these three conflating factors in the market.
MLS expansion in Tennessee, future of real estate data standards + homebuyer demand
In addition to the articles, here are a few items we are reading from across the internet.
The trifecta of inflation, rising interest rates and low inventory makes for a unique real estate market for many buyers. This short NPR story provides insight into the nuance of these three conflating factors in the market.
Greater Alabama MLS is participating in a program offered by Atlanta-based First MLS in which FMLS offers MLSs the ability to enter a data-share agreement and also leverage the sharing of tech tools and more. FMLS’s partnership program represents how some MLSs are finding unique ways to partner with other MLSs in innovative ways to broaden their scope, economies of scale and resources.
Mortgage interest rates jumped to above 6 percent in mid-June, the highest rate in several years and an indication that that steady period of low mortgage interest rates look to be coming to an end. Low interest rates have been one key factor driving demand to very high levels as buyers raced to take advantage of record low rates. This period of rate-driven demand appears like it’s coming to an end.
Homebuyer surveys, falling mortgage applications and dropping new-home sales, provide data that reveals how the market is shifting. The diversity of data points outlined in this article, indicate that the real estate market is likely heading for a sustained shift. The depth, duration and other details of the shift, however, are still unclear.
Housing starts rose 14.6 percent in April from a year ago, according to U.S. Census Bureau data. This marks a continuing trend of increased starts, which measured approximately 1.2 million in April 2017 and in April 2022 came in at just above 1.7 million. Increased construction is one key element for relieving the country’s yearslong inventory shortage. If this increase sustains, and turns into more housing units, the industry’s supply-demand curve will become more balanced.
The median existing-home price was $391,200 in April, up 14.8 percent from April 2021, marking 122 consecutive months of annual home price increases, the longest on record, according to NAR’s recent existing home sales report. April home sales, however, dropped 2.4 percent in April from March, and 5.9 percent from the previous year, a slowdown NAR attributes to increasing interest rates. The market remains in flux, however, as listed homes still sell quickly, with April average days on market standing at 17 days, the same as March and April 2021.
A trend of local communities pushing for slow growth and burdensome building and development protocols – known as the Not In My Backyard (NIMBY) movement – has played a significant role in the way many towns and cities manage growth and how, where and how much it costs for homebuilders to build homes. This article provides a deep first-person reported view of the NIMBY perspective, which provides insight into the passions behind the movement, and how it may evolve.
In the four weeks through May 29, over a fifth of sellers dropped their list price, a 2022 high and the highest percentage in any four-week period since October 2019, according to Redfin data. While the supply-demand curve is shifting slightly more in favor of buyers, buyers are contending with rising interest rates and, still, a relative dearth of homes for sale.
After great demand and supply-chain issues pushed lumber prices very high since the pandemic emerged, the last few months have seen prices drop, according to Nasdaq data. In January, lumber prices reached a height of $1,329 per thousand board feet but had fallen by over 50 percent in late May. The increased price of building materials due to imbalanced supply-demand metric of homes has been one big factor in stymying building, a critical relief valve in increasing the nation’s housing inventory.
Citing a slowing economy, Redfin and Compass announced layoffs of approximately 8 percent and 10 percent, respectively. In addition, Compass announced the closing of eight offices and plans to shutter Modus, the title company the firm acquired in 2020. Many real estate companies are reading the inflation and rising interest rate tea leaves, and preparing their businesses for a cooler real estate market. These types of changes at public companies such as Redfin and Compass provide a window into the kinds of adjustments many real estate companies are now faced with.
Enabling Intelligent Change.