Main real estate trends for June 2021
Let’s dive right into some of the most timely trends we’re seeing. Here’s what’s happening in real estate in June 2021.
1. Houses are selling at breakneck speed
It’s no secret that stocks are low and demand is high, creating one of the most competitive housing markets our country has ever seen. But on the ground, the sense of urgency is real.
According to real estate brokerage data Redfin (NASDAQ: RDFN), the average home sells in just 18 days. That’s a huge 17-day drop from the same time last year, the fastest pace on record.
Many homes also sell faster. In fact, 58% of ads are contracted in two weeks and 45% are contracted in one.
Sadly, it looks like these conditions are not going away anytime soon. Here’s how Daryl Fairweather, Chief Economist at Redfin, put it: “The housing market has gone from one extreme – the start of the pandemic, to one – the rush to buy primary and second homes then. that mortgage rates remain close to their historic lows … This boom in home sales is far from over. “
2. The CDC is slaughtered by lawsuits
The Centers for Disease Control (CDC) has extended the nation’s eviction ban until at least June 30, but property managers and estate agent groups are not taking it in slow motion.
At the end of May, Florida Realtors – one of the largest professional associations of real estate agents in the country – brought an action against the CDC, claiming he overstepped his limits by banning deportations across the country. He also targeted the CDC’s lack of protection of landowners during the pandemic.
“The CDC order does not relieve landlords from their obligations to pay property taxes, make their own mortgage payments on rental properties, or provide the maintenance and upkeep necessary to comply with applicable laws or regulations.” », Indicates the continuation. “Congress has spent billions of dollars fighting COVID-19. It could have provided landlords with direct assistance to cope with the serious and, in some cases, disastrous effects on landlords when tenants no longer pay rent but cannot be evicted for breach of their lease. Congress chose not to. “
The demand is just one of the many pressures currently being put on the government agency, as well as those who run it. Another – this time filed by real estate associations in Georgia and Alabama – is currently on appeal.
3. Foreclosures and bad debts are on the decline
With various foreclosure bans and mortgage forbearance options still available, it’s not a huge surprise, but foreclosure reports and mortgage delinquencies have plummeted. According to ATTOM Data, foreclosure filings fell 1% from March to April and are now down 17% year-on-year. A single seizure of 3,700 starts began in April – a record high for statistics.
At the same time, mortgage delinquencies fell 7.11% month over month. Today, less than 5% of mortgages are in arrears – the first time the share has been this low since the start of the pandemic. What else? Serious delinquencies – or loans past due at least 90 days – also fell by 151,000 during the month.
In total, these statistics mean fewer properties in distress, both today and in the immediate future. For investors who specialize in fix-and-flips and other similar strategies, this could be of concern. Remember though: tolerance options won’t last forever. Once borrowers start to run out of time, things might change, but only time will tell.
As Black Knight said, “At the moment, it looks like the end of Q3 / beginning of Q4 will be an inflection point in terms of understanding how the post-abstention world is going to turn.”
4. Housing affordability is declining
Home prices have been on a tear for some time, and according to the latest data from the Federal Housing Finance Agency, there is no sign of slowing down. The most recent FHFA house price index pushed prices up 12.2% on the year, with the biggest jump seen in the Mountain Census Division (Arizona, Colorado, Idaho, etc.) there -low, prices have increased by more than 15% in the last 12 months. .
Even prices in historically low cost areas of opportunity are on the rise. In fact, 75% of OZs saw the median home price increase during the year, and a much smaller proportion of homes costing less than $ 150,000 in these areas.
When you raise mortgage rates, affordability begins to slow down dramatically. A recent analysis by title insurer First American shows that “real house prices” – which take into account interest rates, house prices and income trends – rose 4.2% in March through compared to February figures.
“The decline in affordability has been widely felt as accessibility has declined year over year in 45 of the 50 markets we track,” said Mark Fleming, Chief Economist at First American.
5. New administration focuses on housing
Housing issues have been at the center of attention since the Biden administration took power, and they trickle down to investors both for the good and the bad.
On the bright side, you have the SECURE Act, which was reintroduced to Congress in mid-May. This bill would allow remote notarizations (and therefore digital shutdowns) nationwide. If passed, it will be a huge boon for investors, especially those buying out of state.
There is also the massive rental aid measure adopted as part of the US bailout in March. Although some states have been slow to disburse these funds, the bill has allocated more than $ 21 billion to tenants in need. It can be used for past due rent, future rent, utilities, etc.
On the other hand, the administration also plans to reduce the tax benefits of 1031 exchanges, limiting capital gains tax relief to purchases under $ 500,000. If you are relying on similar trades for your portfolio, you may want to make a few moves before the change solidifies.
The bottom line
Real estate trends are always on the move. Want to stay up to date with the latest trends and events? Check back here every month for updates.