This is such a unique time right now because mortgage rates are still historically low as they have been for several years, and even though we saw a drop in inventory around April, that's starting to come back fairly quickly. Many homeowners that were planning on selling during the busy spring season anyway are pushing forward and listing their properties but values remain high and while interest rates are low, it still may be to difficult for buyers to purchase a property.
But overall listings are down about 20% and that means that those that are buying have less to choose from. Builders were also unprepared for this jump in demand as building permits have dropped off as well as housing starts but with labor and supply issues, regardless of the demand, building might be impossible.
Even before the pandemic started the real estate market was short about 350,000 properties based on the demand from buyers so where does that go moving forward? It naturally means that home prices are going to go up because of the value and supply and demand all lean that direction and it may be even more difficult in the starter homes for those first-time homebuyers trying to find a way to inch themselves into the housing market.
It's kind of a stretch but many experts feel that this is a result of the nearly 9 million homes that went into foreclosure during the subprime mortgage bust. 5 million of those homes were snatched up by investors who turned them into single-family home rentals. That means that there are approximately 5 million homes that could be sold to first-time homebuyers that are now rented. The rental market has been extremely lucrative over the last 10 years and the hope is that a lot of these investors will now think about selling their homes. This would add quite a few more single-family home listings to the market and opportunities for first-time homebuyers. [Source]
However, new home sales have actually increased over the last couple of weeks by about 1%. Again, with the supply of materials, builders are just not creating enough homes fast enough, something we saw back in 2010. Home purchase applications are up about 54%.
Experts predict that the data, while bleak in some areas, has a lot of positives. Forbearance mortgages are up and if people can't go back to work quickly, they may see delinquencies. But, purchase activity is starting to rebound, mortgage rates remain relatively low, which means that there was a 2% increase over the last few months and it refinances over last year at this time. New mortgage applications are up 25% over normal predictions even though there was a stark drop off of nearly 30% back in April. Also, the number of forbearance requests is starting to slow down, so that's a good sign as well.
All in all this is a pretty volatile market that's changing week by week. One thing we do know is that mortgage rates are going to remain low so if you're planning on buying, it's better to buy now rather than wait until there are more homes on the market and higher prices. On the flip side of that, if there are fewer buyers right now, you may have better leveraging power.
To learn more about the housing market in Portland and Vancouver Washington please contact my office today. To discuss options if now is a good time to sell your home and what you could earn from it, let's chat soon.