It’s been a tough few months for anyone looking for offers – especially the MLS. People just didn’t sell their houses. It makes sense that the inventory is low. Despite all the uncertainty about the economy, people are using their homes more than ever. And who wants strangers running around their lockdown palace?
Here’s an overview of our favorite items for BPInsights Pro members only in April.
Will the housing market cool down?
Inventory bottomed nationwide in October, according to Federal Reserve data, reaching levels we have not seen since 2004. This has resulted in a huge seller market in the past few months. An agent friend of mine recently told me that an apartment in Denver bid for a client was $ 76,000 too much. Whoa.
From February 2021, things can change. The US home supply index soared to 4.8 that month, the highest level we saw in May 2020. As a reference, the average for the four years before the COVID-19 pandemic was 5.6 – we’ll be back!
What if the inventory increases?
Supply and demand tell us that prices will generally decrease as supply – or the housing stock – increases, provided that demand remains constant. Put simply, if there are more homes for the same number of buyers, buyers will no longer have to compete as hard for a limited supply of property as they do today.
I suspect that if this glut of supply comes to fruition, list prices won’t go down, but we will see a drop in properties well in excess of demand.
Unless mortgage rates keep rising. As I wrote on the Advance Guide blog recently, recent inflation news could potentially drive mortgage rates higher in the coming months. But even if interest rates rise, they are likely to remain extremely low – at least from a historical perspective. But the convergence of these two factors could really slow down the craziness we are witnessing right now. Less competition from buyers and more expensive mortgages seem like a recipe for a return to more normal growth rates.
For more in-depth analysis of the housing market – including an interpretation of the latest news from the Bureau of Labor Statistics – see Will the Housing Market Cool Down in 2021?
Which cities saw the biggest drop in rents in 2020?
From bustling restaurants and crowded bars to live concerts and huge sporting events, almost every attraction that makes big city life worth the sizable rent has been basically non-existent since COVID-19 closed face-to-face gatherings.
In notoriously expensive cities like New York City, Los Angeles, and San Francisco, where one-bedroom apartments in some neighborhoods cost more than $ 3,500 a month in some neighborhoods before the pandemic broke out, many of the young professionals who paid that much were to live nearby in the office have taken the term “remote work” literally and pack for distant destinations in the sun belt or even just in the nearby suburbs.
One-bedroom apartment rents have fallen year-on-year in 37 of the US’s 100 largest counties, according to a recent report from Realtor.com.
From notoriously expensive big cities to technology centers and major tourism centers, rents here have fallen the most since the start of the novel coronavirus pandemic.
Learn more about it Why Rents have fallen at these locations, see Where did rents fall the most in 2020? on BPInsights.
What is inflation – and how does it affect real estate?
Inflation plays an important role in the economy. With unprecedented government incentives in recent months, inflation fears have surfaced after years of stability. What does this mean for your real estate career? What does it mean for you?
Inflation may not be the sexiest topic, but it’s an important concept real estate investors need to understand. Real estate is widely recognized as one of the best ways to hedge against inflation risk, and understanding inflation will help you address potential concerns and better understand one of the fundamental forces of our economy.
not (yet) affine for inflation? In How Does Inflation Affect Real Estate ?, I explain:
- What is inflation – and what happens when it rises?
- Why economists speak of inflation today
- The Interplay of Real Estate and Inflation … And Why Investors Should Not Worry.
Are you ready to upgrade to Advance Guide Pro and access all of this great content – and more? Start your membership for just $ 39 per month.
What is BPInsights?
Successful investing requires accurate, easy-to-understand information about your properties and the markets in which you are investing. BPInsights is an exclusive feature for Advance Guide Pro members that offers a deeper look into the real estate market. This is what BPInsights offers:
- Fresh and unique data. We have licensed data from the leading providers in the industry to ensure Advance Guide Pro and Premium members have access to any changes in the market at all times.
- Property Insights tool. Whether you are analyzing a new investment or making sure your current properties are being offered at reasonable prices, Property Insights will provide accurate compilations to underpin your strategy.
- In-depth analysis. Our team of seasoned real estate investors and analysts break down market trends to help you process vital information so you can better manage your investments.
- Proprietary spreadsheets. Download tables created by the BPInsights team so you can personalize the data and do your own analysis.