Patience Is A Virtue...

By
Real Estate Agent with KW Evolution - Topsfield, MA 92593-B

It's not only patience that is needed in this market. Perseverance and a positive attitude are needed. In our area, it's pretty typical for a viable listing to have 60 or more showings and 10+ offers. Now I'm beginning to see agents deferring showings until a Saturday Open House then make the deadline for offers for Monday by 5:00 p.m. 

There is a feeding frenzy taking place. I do my best to encourage my buyers not to succumb to the emotion and get caught up in making outrageously high offers. People are using escalation clauses, covering appraisal gaps, extended closings with rent back clauses, foregoing inspections AND 19½% of our transactions are CASH!

This cannot be sustained. It's like jumping into a hungry Pirana-filled river. 

 

Patience Is the Key to Buying a Home This Year

Patience Is the Key to Buying a Home This Year

Low inventory in the housing market isn’t new, but it’s becoming more challenging to navigate. Danielle Hale, Chief Economist at realtor.com, explains:

The housing market is still relatively under supplied, and buyers can’t buy what’s not for sale. Relative to what we saw in 2017 to 2019, March 2021 was still roughly 117,000 new listings lower, adding to the pre-existing early-year gap of more than 200,000 fresh listings that would typically have come to market in January or February. Despite this week’s gain from a year ago, we’re 19 percent below the new seller activity that we saw in the same week in 2019.

While many homeowners paused their plans to sell during the height of the pandemic, this isn’t the main cause of today’s huge gap between supply and demand. Sam Khater, Vice President and Chief Economist at Freddie Mac, Economic Housing and Research Division, shares:

The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes . . . That decline has resulted in the decrease in supply of entry-level single-family homes or, ’starter homes.’”

When you consider the number of homes built in the U.S. by decade, the serious lack of new construction is clear (See graph below):Patience Is the Key to Buying a Home This Year | Keeping Current MattersThe number of newly built homes is disproportionately lower than the rate of household formation, which, according to the U.S. Census Bureau, has continued to increase. Khater also explains:

Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage and that deficit has grown. In 2018, we estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, we estimate that the housing shortage increased to 3.8 million units by the end of 2020. A continued increase in a housing shortage is extremely unusual; typically in a recession, housing demand declines and supply rises, causing inventory to rise above the long-term trend.”

To catch up to current demandFreddie Mac estimates we need to build almost four million homes. The good news is builders are working hard to get us there. The U.S. Census Bureau alsstates

:

Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,766,000. This is 2.7 percent (±1.7 percent) above the revised February rate of 1,720,000 . . . Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,739,000. This is 19.4 percent (±13.7 percent) above the revised February estimate of 1,457,000. . . .”

What does this mean? Lawrence Yun, Chief Economist at NARclarifies:

The March figure of 1.74 million housing starts is the highest in 14 years. Both single-family units and multifamily units ramped up. After 13 straight years of underproduction – the chief cause for today’s inventory shortage – this construction boom needs to last for at least three years to make up for the part shortfall. As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs, and hence, more choices for consumers. Housing starts to housing completion could be 4 to 8 months, so be patient with the improvement to inventory. In the meantime, construction workers deserve cheers.

Bottom Line

If you’re planning to buy this year, the key to success will be patience, given today’s low inventory environment. Contact a local real estate professional today to learn more about what’s happening in your area.

Thank you to KCM for compiling this information

 

Posted by

I pray that God our Father and the Lord Jesus Christ will be kind to you and bless you with peace

2 Thessalonians 1:2

 

Doug Dawes REALTOR®, AWREP, LMC

Broker Sales Associate

KELLER WILLIAMS REALTY - Topsfield/Newburyport

49 Main Street
Topsfield, MA 01983
 978-887-3995  ~ Office
 978-270-3037  ~ Cell
 DougDawes@KW.com

Comments (12)

Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Doug, times are difference now in Real Estate and people do not want to loose out on getting a home.  

Apr 29, 2021 07:18 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Doug -  these certainly are unusual times.  It will take awhile to catch up with building.

Apr 29, 2021 07:21 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Doug, definitely need patience in our current market.   Have one family we have written four offers so far....

Apr 29, 2021 08:37 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Doug - For years I have heard patience is a virtue.  Shouldn't it be here by now?  

Apr 29, 2021 03:03 PM
Doug Dawes
KW Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Hi Will,

I understand the emotion but when it's the emotion driving the decision making it becomes irrational, imho

Apr 30, 2021 05:20 AM
Doug Dawes
KW Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Building costs have skyrocketed and I certainly hope they level off or come back down when the supply chain gets back to normal Grant

Apr 30, 2021 05:22 AM
Doug Dawes
KW Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Good Morning Joan,

A fellow Realtor, my neighbor, has shown her clients 50 properties and made 11 offers before 1 hit!!! CRAZY!!!!

Apr 30, 2021 05:23 AM
Doug Dawes
KW Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

I got a good laugh at your reply, Michael. Somehow I think patience is one of those virtues that never fully arrives...lol

Apr 30, 2021 05:25 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Some of us definitely need to work on our patience.

Take care, be safe and have a great day.

May 06, 2021 07:50 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Good Friday morning, Doug.

I hope you are having a productive week.

Enjoy the holiday weekend.

May 28, 2021 08:47 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Doug indeed patience & perseverance is key, just to be clear it has always been key attributes, now days just need a little more of both:)Endre

May 30, 2021 09:23 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It took me a while to get the patience that I've gotten to gaine over the years for absolutely sure , but it's well worth having in your  toolbox :

Jun 08, 2021 09:54 PM