A California builder I know was negotiating with his painter when the painter said, "You need me more than I need you!" This same builder sent me an itemized list of over 22 items that they could not get at all, were difficult to get or were subject to hyperinflation. I recently had to paint a rental and had to visit several Sherwin William's paint stores to get the paint I needed. The sales clerk told me they did not expect to get back to full production until September AT THE EARLIEST. In PebbleCreek, a 55+, resort style community, if you purchase a new home today, it will be delivered in 30 months. It seems like the story is the same wherever you go. There is not much supply and/or prices are rising.
What does it all mean for the housing market? I am not much for predictions, but the times that I have heard contractors be so bold as to say, "You need me more than I need you," is time to get a little conservative. That being said, our real estate market is marked by too few homes and, even if home builders were producing at an adequate pace (they are not!), the supply would take a long time to catch up with demand. In other words, prices will probably keep rising for the foreseeable future.
It is good to remember, few saw the housing market decline prior to the Great Recession, so a little caution is in order. For example, what happens if interest rates spike up? It is probably time to reduce debt and save more cash. If you are going to buy a home, put as much down as possible and investigate the rental rates for the house. Like interest rates in the stock market, rents can provide a margin of safety if the market corrects or turns bad. We just purchased a second home in Arizona so I do think real estate can still be a good buy.
Yes, year over year, Elk Grove housing prices have risen rapidly. Remember, we are measuring sales just after the beginning of the pandemic so prices were muted a bit last year. Still, what a year for homeowners.
As of 6/15/2021, there are 64 homes available to purchase in Elk Grove at an average list price of $634,957. If you would like to view any of them, let me know. I love to show homes!
Random Information From Around the Country
Is the housing Market Starting to Slow? Ryan Lundquist, the Sacramento Appraisal Blog.
"As a colleague said earlier this week, “It’s the wild, Wild West out there!” No truer words have been spoken. In some neighborhoods and price ranges, we are waiting in line to tour homes - and that’s WITH an appointment!" Debe Maxwell, CRS, Charlotte, NC.
"I waited 6 months to get a refrigerator. Three months for a washer and dryer. The impact will be short-term. Things will catch up. When? Only time will tell." Kathleen Daniels, Probate & Trust Specialist, San Jose, CA.
"It's bad up here in Canada too. There is a shortage of resin so anything made with resin is on back order for months. So it should prove interesting for home builders and all trades." Steve Higgins, Kelowna, BC.
"It's been going on here for 4+ months. It's not getting better, and many builders are saying it will be a long slow recovery. Some builders have held off on new home starts, and are only doing the concrete basements and will let them sit until materials become available and prices come down." Jeff Pearl, Lovettsville, VA.
"The builders in our area are quoting a 22 month delivery time +/-." Buzz Mackintosh, Frederick, MD.
"Hearing the same thing including builders limiting sales at developments to as low as one a month. Can't get help and can't get materials. These same builders were selling up to 10 homes or more per site pre-pandemic." Wayne Martin, Chicago, IL.
"It's not just new construction here but also remodeling since during the shutdown a lot of people used that time to remodel either their home or business. That caused prices to skyrocket a few months ago and things like appliances are in short supply unless you can be flexible about what you want." Diana Zaccaro, Coco Beach, Florida.
"Realtor.com reported that in Sun Valley, California median list price was $749,250 in April of 2021 higher from $699,999 in March of 2021." John Pusa, Glendale, CA
Housing Notes, Jonathon Miller, New York.