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This Week In Real Estate – September 6, 2021

Central Oregon Real Estate - This Week In Real Estate

Boom or bubble?

Boom or bubble? That is a frequently asked question about the state of the real estate market. According to Frank Nothaft, CoreLogic chief economist, and many experts, the market has a more boom-like appearance than a bubble driven by simple supply and demand. The demand has been driven by record-low mortgage rates. Supply, or lack of it, is a result of the U.S. underbuilding its housing needs by at least 5.5 million units over the past 20 years according to the National Association of Realtors, this week in real estate. There are signs of a moderating market as 17.3% of active inventory have made a price adjustment; the highest share in 21 months. While inventory was down 25.8% year-over-year in August that was an improvement from 33.5% in July. Below are a few newsworthy events from the first week of September that influence our business:

Here’s Why Experts Believe The U.S. is in a Housing Boom and Not a Bubble.

“You can see in just basically the last 15 months or so, we’ve seen a dramatic acceleration in home price growth to levels we haven’t seen in decades,” CoreLogic chief economist Frank Nothaft said. However, according to most experts, the market is shaping up to look more like a boom rather than a bubble. “We say bubble because we can’t believe how much prices have gone up,” CNBC real estate correspondent Diana Olick said. “A bubble tends to be something that’s inflated that could burst at any minute and change and that’s not really the case here.” While speculation certainly is a factor, the main cause for the current housing demand is low mortgage rates. At the start of the pandemic in March 2020, the 30-year fixed-rate mortgage rate sat at 3.45%. By July of this year, that number had dropped to 2.87%. Supply is also an issue. According to the National Association of Realtors, the U.S. has underbuilt its housing needs by at least 5.5 million units over the past 20 years. That’s a stark comparison to the previous housing bubble in 2008 when overbuilding was the issue. “So we’ve got a boost in demand that’s due to record low mortgage rates and we’ve got a shrinkage of supply,” Nothaft said. “So between more demand and less supply, prices are up and they’re up at the fastest pace since the 1970s.” Full Story…

New Listings Jump 5.1%; Price Adjustments Moderate.

More homeowners are listing their homes for sale, which is opening up options for anxious home buyers who have faced fierce competition the last few months over a limited housing stock. New listings rose 5.1% in the 50 largest metros. As more inventory and new listings arrived on the market in August, the rate of sellers making price adjustments has also begun to approach more normal levels, notes. The share of sellers who made listing price adjustments grew to 17.3% of active inventory, which is the highest share in 21 months and close to more typical levels that were seen between 2016 to 2019, researchers note. Still, housing remains tight, even if with the additional inventory. U.S. housing inventory was down 25.8% year-over-year in August. That did mark an improvement over last month when inventories were down 33.5% annually. Meanwhile, new listings were up 4.3% compared to a year ago. Full Story…

Mortgage Rates Stuck in a Rut at 2.87%.

The average 30-year fixed-rate mortgage was flat at 2.87% for the week ending in Sept. 2, according to mortgage rates data released Thursday by Freddie Mac‘s PMMS. According to Sam Khater, chief economist at Freddie Mac, mortgage rates have held steady as economic growth and rising prices in goods have cooled. He predicted that those factors will also moderate home-price growth. “Economic growth and the acceleration in inflation have moderated in the last month, giving the markets comfort and leading to a stabilization in mortgage rates,” said Khater. “Heading into the fall, home purchase demand is stable, home sales remain firm and above pre-pandemic levels, and inventory of unsold homes is tight but improving modestly. These factors will allow for home price pressures to ease over the remainder of the year.” Mortgage rates have stayed stubbornly low for most of 2021, defying expectations they would rise significantly. The low cost of financing is supported by the Federal Reserve’s continued, aggressive monthly asset purchases. Last week, in a virtual address at the annual Jackson Hole, Wyoming economic symposium, Federal Reserve Chair Jerome Powell indicated that the central bank would continue its asset purchases at the current pace until “substantial further progress” is made toward employment and price stability goals. The central bank previously signaled it would begin to taper its $120 billion in monthly purchases of U.S. Treasury bonds and mortgage-backed securities by November. Full Story…

Originally compiled & posted by Jason Waugh on the Berkshire Hathaway HomeServices Northwest Real Estate company blog.

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Mitch Darby

I am a real estate broker, architect (both licensed in the State of Oregon), and life-long Oregonian. If you are looking to buy or sell, I can help! I have Northwest Knowledge and am proud to be associated with Berkshire Hathaway HomeServices - Real Estate's Forever Brand!

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