In this housing market update and forecast video, the Supreme Court has struck down the CDC’s eviction moratorium ban… Home prices are still up by 20%, your rent is increasing even more, and Forbearance data show a significantly different outcome than many expected.
So What does this all mean for the current state of the housing market? In this video I am going to give an update on the housing market, and what this means going into 2022.
Supreme Court Ends CDC Eviction Ban…
The Supreme Court has blocked the Biden administrations order that extended the federal eviction moratorium to a large part of the country, which was expected by the White House.
The CDC issued this ban just about a month ago and was set to expire on October 3rd, but with the overturning by the Supreme Court evictions are able to begin immediately. There are still about 7 million people behind on their rent who could face eviction if they do not get caught back up on their own or through the government passed relief aid that has still yet to be distributed to those in need.
Since the eviction bans have been in place over the last 11 months, there have been 1.5M fewer evictions than normal — this has kept many families in their homes during the difficult times from the pandemic.
The problem the eviction ban did cause is the many small landlords who rely on rental income from their properties to pay the mortgage and other bills, have in large part not seen equal relief. This means that their have been a large number of landlords who had to pay their bills on their rental properties while their tenants may have been 3, 5, or 10 months or more behind on their rent.
While there were SOME protections such as Mortgage forbearance, not everywhere could necessarily get this aid, and furthermore those who don’t have a mortgage are left out.
The solution would be to get the COVID relief money out to those who need it most — Congress passed about $50B in housing related relief money, but the states in large part have not distributed most of this money. As of about a month ago, only $3B of this money has been distributed.
But with that, let’s move on to some additional updates from the last 2 weeks.
Quick data points…
Home prices were up nearly 20% in July over the year prior, this is 6% below the peak that we reached a few months back, but a significant decrease overall as the housing market continues to cool down.
Seasonally adjusted, home sales are down by 1.5% year over year. This, also being a significant decrease from the peak in May and June.
Moving on, new listings adjusted seasonally fell flat year over year after significant peaks and valleys over the last year.
We’re also finally seeing days on the market continue to creep up after the lowest point on record, reaching 15 days in July — up from 14 in June.
Lumber Prices…
Over the last 2 weeks lumber prices have been all over the place. We first saw them begin dropping, but over the last week or so the have slowly been inching back up. By the end of last week they reached $518 per thousand linear foot.
These relatively low prices are great news for homebuilders and ultimately homebuyers. According to Doug Yearly, the CEO of Toll Brothers — Lumber is down by about $40,000 per home. These benefits should begin to hit the market in the 3rd and 4th Quarter of 2022, so we’ve still got quite a ways to go for the new construction housing market to return to a new normal.
Builders are also finally beginning to secure lumber at the much lower prices that we’ve seen over the last few months since the peak prices near $1,700 in May. But just because builders are seeing a significant savings, particularly from lumber costs dropping, it doesn’t mean builders are going to share these savings with buyers. And given how competitive the housing market has been, many buyers and real estate investors may be willing to pay these prices.
However if you are one of these buyers, you should be prepared to negotiate the price of a newly built home as much as possible to ensure you’re getting the best deal possible. Many builders will be open to negotiating their prices, especially if they need the cash to move on to the next build.
Mortgages Rates…
Over the last 2 weeks, mortgage rates have remained relatively the same, at still 2.87% for a 30 year fixed rate mortgage according to Freddie Mac. The flat rate has led to relatively stable demand for mortgage purchase and refinance applications.
00:00 Intro
00:28 Supreme Court Overturns CDC’s Eviction Ban
03:10 Small Housing Market Updates
03:51 Lumber Price Update
05:15 Mortgage Interest Rates & Applications
06:11 Forbearance Update
08:00 Rental Market Update
