Market News Home is Where the Ca$h Is What happened Home prices are insane! The U.S. Dept. of Housing & Urban Development reported median home sales prices hit an all-time high of $346,800 in the fourth quarter of 2020, up 8% from the prior year. Since then, price gains have only accelerated: - The National Association of Realtors (NAR) found the median price for home sales rose 16% over the prior year in February.
- Redfin’s data shows median home prices increased 17% year-over-year and hit an all-time high through the 4-week period ended April 4.
If you’ve been paying attention, you don’t need to have this data to tell you home prices are bonkers. In fact, you’ve likely noticed the lack of for sale signs in your neighborhood. Housing has devolved to an open bidding war that would put 2000-2006 to shame with NAR reporting that every home sold in February had more than four offers! Sales are closing in record time with stories of all-cash transactions, sight-unseen sales, above-listing offers, and hagiographic letters to sellers from nervous buyers now commonplace. In fact, the No. 1 Google search is “When is the housing market going to crash?” How did this happen? The pandemic was good for housing There are a few drivers of exploding housing prices and most were caused or exacerbated by the pandemic. For the demand side: - Fed Reserve Chairman Jerome Powell slashed interest rates to zero and purchased $40 billion in mortgage-backed securities monthly. The 30-year fixed rate fell as low as 2.7% in 2020, levels not seen in the previous decade.
- Covid required many Americans to work from home and to cancel vacations and other activities. The “forced savings” -- and government stimmies -- increased demand for big ticket items like homes.
- Finally, covid’s psychological effect drove many city renters to seek stability and more living space in suburban communities.
At the same time, supply was constrained with inventory levels down nearly 30% from a year ago: - New home construction and semi-finished material manufacturing were paused to protect workers and prevent possible overproduction.
- Existing home sellers shelved listings to limit covid exposure from open houses and other customary sales functions.
- Many residential landlords are prevented from evicting tenants and selling homes due to CDC’s halt order, which limited potential supply.
Where now? While it’s true the pandemic’s ending will soften some of the conditions that drove housing into hyperdrive, housing prices should continue to rise from a variety of factors. Supply will be constrained in the short-term even as homebuilders are racing to meet demand. Also, new homes are more expensive than similar resells which will increase median prices. Interest rates are now on the rise but remain below long-term norms. Housing prices tend to be “sticky” (financial crisis aside) as most sellers can sell on their own terms and governments tend to promote higher prices (and increased tax valuations) via restrictive zoning policies. At the end of the day, there are economic benefits from rising home prices. Home construction is a big contributor to the economy and if you own a home your net worth is trending up. For anyone looking to buy a home for a first time, the situation isn’t so exciting. Yet, it's undeniable that trends are reshaping real estate in significant ways. So whether you’re a homeowner or not, it's possible to invest in not only rising home prices, but the shifting landscape of how we buy homes. This week we’ve created three stocks that will benefit from the real estate trade | 
Tidak ada komentar:
Posting Komentar