With rising home prices and shortages of inventory being a trend over the past year, the demand for housing and surge in costs have been hot topics.
David Sattlemeyer, president of Longleaf Pine Realtors, explained the demand the region has been seeing and his thoughts on the future of the housing market.
BOOMING SELLER’S MARKET AND STRUGGLING BUYERS
According to a Zillow report, the typical home price increased 13.2% in May 2021 from May 2020.
“Historically speaking this year, the market has been epic,” said Sattlemeyer. “We have experienced the greatest sales on record in our association of realtors in history. It's been an amazing time to sell a house, with values rising and profits being up.”
With the real estate market being in favor of sellers, it has been a challenging time for buyers. He attributed the cause for the current
market to the shortage of supply versus high demand -- less homes and too many buyers. The results of these conflicting factors are extended times and high costs for new builds, fueling further the shortage of homes.
Another factor of the high demand for houses is the pandemic allowing many in the workforce to work remotely from anywhere they
“So now, you can truly get the house you want, live in an area you want, because you don't have to commute to work anymore,” Sattlemeyer added. “So people are just buying all over the place. There’s a great migration of Americans throughout the country.”
Reports have shown a higher number of multiple generations of a family living together in the same house due to the shortages in houses, he said.
SUPPLY CHAIN SHORTAGES
Labor shortages across the country have further slowed down many processes. Sattlemeyer said many of his regular contractors have reached out to him asking for worker recommendations since they’re struggling to find workers.
“Some people are concerned about working, and we’ve also had so many attempts from the government to help people during these challenging times, we stopped foreclosures, stopped evictions, we were paying for unemployment. So, all these efforts were [with] good intentions but then people don’t have as much incentive to go back to work when they have unemployment benefits,” he said.
Due to raw material shortages among others, many builders are pausing pre-sales on homes, said Ben Stout, owner of Ben Stout Construction.
It used to be possible to get cabinets in three weeks and now it takes eight weeks, he mentioned.
“From the consumer standpoint, although it may look like builders are being difficult to work with and jacking the prices, the truth of the matter is the components of the house have escalated so much, builders are having to increase their prices,” Stout said.
Stout explained that the recent market saw a hike in the price of lumber, which was broadcasted, and, in the last 30 days, lumber prices have declined again. However, costs for other home products are following the same price-hike patterns that wood did and that’s not being widely reported.
“Garage doors, siding of the house, plumbing materials, HVAC compressors’ prices have continued to rise,” he said. “It’s tough for the homebuilders, and the selections for the clients is almost nothing because you make a selection, and by the time you go to install the product you find out from the vendors that it’s no longer available or backordered.”
LACK OF AFFORDABLE HOUSING
The median home value in the Fayetteville area had a $10,000 increase from 2019 to 2020, and is on track for an over $10,000 increase for 2020 to 2021, Sattlemeyer said.
“You’re looking at historic profits for this area for sellers. The flip side of the coin, which is not good news, is that affordable housing has been impacted by that because homes are worth more that has negatively impacted those with more modest needs, especially first-time home buyers,” he said. “People are benefitting and suffering at the same time.”
National median rent increased 13.8% as of January 2021, according to study by apartmentlist.com
“Some buyers have been pushed out of the market -- since it's been so challenging to win a house -- and have been for a year-and-a-half. Some are giving up and choosing to rent,” Sattlemeyer said.
WHAT THE FUTURE HOLDS
The housing market is predicted to stay in favor of sellers over the next year or more.
“We are going to continue working hard to make homes more affordable, it’s not going to be overnight,” Sattlemeyer said.
Stout said his building team is working hard to maintain great relationships with real estate agents and clients to present a great experience to them.
“That way, down the road when the market changes, we show them we are doing all we can for our buyers,” he added.
Sattlemeyer’s advice for sellers is to take advantage of the market and for buyers to be more patient and for both to contact their trusted real estate agents to rely on and help them navigate the process.
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