Real Estate Insider Newsletter March 2021

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The State of the Housing Market R E G I O N A L U P D AT E

A MESSAGE FROM OUR PRESIDENT AND CEO To our valued clients and future clients: Thank you for helping us make 2020 an outstanding year from a business perspective. We have all been dealing with so many things and your business means the world to us. Allowing our team to provide you great service is a privilege. We had the pleasure of hearing from Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of Realtors recently, and he shared his outlook for 2021. Hopefully this information gives you some insight into the question everyone is asking right now, “So, how’s the real estate market?”

Christy H. Budnick President and CEO

Berkshire Hathaway HomeServices Florida Network Realty

Over the last five years, prices have risen even though units have remained relatively flat: • 2015 5.3mm units sold • 2016 5.4mm units sold • 2017 5.5mm units sold • 2018 5.3mm units sold • 2019 5.3mm units sold And then there was 2020 with 5.64mm units sold!

So what’s in store for 2021? Dr. Yun predicts that there is potential for a 20 percent unit increase, landing somewhere between 6.1-6.8 mm units sold based on: ο The economy will improve, likely seeing an increase in GDP of 3-4 percent. ο Vaccinations will improve, with half of the Nation vaccinated by summer and reaching population immunity by the fall. ο With vaccinations and improvement in the economy, it is anticipated that Baby Boomers will enter the selling ring in large numbers, improving inventory. ο President Biden’s housing policy aimed at boosting middle-class homeownership. It is anticipated that a first-time homebuyer credit may be made available that would provide help with the down payment versus a tax credit on a tax return. ο Housing starts are up with a strong focus on single-family home production versus condo/townhome properties, improving inventory. • In his official forecasts Dr. Yun predicts 4 percent price growth. Being more candid with us, he shared that it will realistically be 5-7 percent. • It will take 2-3 years to return to balanced market conditions and that inventory will continue to be tight until then. • Mortgage forbearance: At the beginning of the pandemic, 5 million homeowners applied for mortgage forbearance. Of the 5 million, only half couldn’t make their payments while the other half continued making payments. When forbearance ends, there will be some homeowners who need to sell their homes. Foreclosures are unlikely since most homes have positive equity. It is expected that President Biden will extend forbearance to allow for more job creation and the economy to strengthen. • Strong sales of vacation and luxury homes are expected, particularly since people can largely work from home now. • Interestingly, the data is NOT showing flight out of cities to suburbs with the exception of New York City. Instead, the migration is a result of more people with the ability to work from anywhere and a flight from high-tax areas. Overall, Dr. Yun is very optimistic about 2021 and so are we! Your Berkshire Hathaway HomeServices agent will be happy to give you an analysis on our local market and your home’s value if that would be helpful. Thank you for reading our newsletter – We hope you find it valuable. ©2021 BHH Affiliates, LLC. An independently operated subsidiary of HomeServices of America, Inc., a Berkshire Hathaway affiliate, and a franchisee of BHH Affiliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of Columbia Insurance Company, a Berkshire Hathaway affiliate. Equal Housing Opportunity. Information not verified or guaranteed. If your home is currently listed with a Broker, this is not intended as a solicitation

2020 ANNUAL SUMMARY ON THE NORTHEAST FLORIDA HOUSING MARKET The 2020 housing market was unexpectedly turbulent towards the end of the first quarter as a result of the pandemic that spread across the country. As the first wave of COVID-19 hit in the spring, housing market activity slowed substantially before staging a dramatic comeback just a couple months later. Buyer activity was the leader again in 2020. With mortgage interest rates setting record lows multiple times throughout the year and a strong drive by many buyers to secure a better housing situation (in part due to the new realities brought on by COVID-19) many segments of the market experienced a multiple-offer frenzy not seen in the last 15 years or more. While markedly improved from their COVID-19 spring lows, seller activity continued to lag buyer demand. It has strengthened the ongoing seller’s market for most housing segments as inventories remain at record lows. Sales: Pending sales increased 12.9 percent, finishing 2020 at 36,664. Closed sales were up 8.2 percent to end the year at 34,932. Listings: Comparing 2020 to the prior year, the number of homes available for sale was lower by 46.9 percent. There were 4,549 active listings at the end of 2020. New listings decreased by 1.8 percent to finish the year at 40,408. Lender-Mediated Properties: The foreclosure market continued to remain a small player in the overall market amid numerous forbearance efforts undertaken by the government and lenders. In 2020, the percentage of closed sales that were either foreclosure or short sale decreased by 34.4 percent to end the year at 2.8 percent of the market. Foreclosure and short sale activity may tick higher in 2021 as forbearances expire with some homeowners unable to meet their obligations.

Pending Sales 27,777














New Listings 40,598


Florida Network Realty

New Construction: Nationally, builder activity was robust though lumber prices were dramatically higher, increasing the costs of new construction substantially. Overall, the construction of housing units continued to be below what is necessary for long-term supply. Locally, new construction market share was at 17.7 percent, while months of supply finished 2020 at 1.6 months. Previously owned homes have seen months of supply decrease from 3.6 to 1.5 months over the last five years, and new construction supply has dropped from 4.8 to 1.6 months. Prices: Home prices were up compared to last year. The overall median sales price increased 9 percent to $255,000 for the year. Single-family home prices were up 9.3 percent compared to last year, and townhome/condo home prices increased 10.5 percent. The housing market in 2020 proved to be incredibly resilient, ending the year on a high note. Home sales and prices were higher than 2019 across most market segments and across most of the country. Seller activity recovered significantly from the COVID-19 spring decline, but overall activity was still insufficient to build up the supply of homes for sale. As we look to 2021, signals suggest buyer demand will remain elevated and tight inventory will continue to invite multiple offers and higher prices across much of the housing inventory. Mortgage rates are expected to remain low, helping buyers manage some of the increases in home prices and keep them motivated to lock in their housing costs for the long term. These factors will provide substantial momentum for the housing market into the new year. Current as of January 8, 2021. All data provided by the Northeast Florida Multiple Listing Service. Report © 2021 ShowingTime.

Median Sales Price 40,408 $185,500




$222,000 $233,990




















WANT TO BUILD WEALTH? BUY A HOME THIS YEAR. Every year, households across the country make the decision to rent for another year or take the leap into homeownership. They look at their earnings and savings, and then decide what makes the most financial sense. That equation will most likely take into consideration monthly housing costs, tax advantages and other incremental expenses. Using these measurements, recent studies show that it’s still more affordable to own than rent in most of the country. There is, however, another financial advantage to owning a home that’s often forgotten in the analysis – the wealth built through equity when you own a home. Odeta Kushi, Deputy Chief Economist for First American, discusses this point in a recent blog post. She explains: “Once you include the equity benefit of price appreciation, owning made more financial sense than renting in 48 out of the 50 top markets, with the only exceptions being San Francisco and San Jose, Calif.”

What has equity meant to homeowners in the past? ATTOM Data Solutions, the curator of one of the nation’s premier property databases, analyzed the typical home-price gain owners nationwide enjoyed when they sold their homes. Here’s a breakdown of their findings:

In 2020, home sellers nationwide realized a home-price gain of $68,800 on the typical sale, the highest level in the U.S. since at least 2005. Based on median purchase and resale prices

The typical gain in the sale of the home (equity) has increased significantly over the last five years. CoreLogic, another property data curator, also weighed in on the subject. According to their latest Homeowner Equity Insights Report, the average homeowner gained $17,000 in equity in just the last year alone.

What does the future look like for homeowners when it comes to equity?? The chart on the right shows seven major home price appreciation forecasts for 2021. The National Association of Realtors (NAR) recently reported that the median-priced home in the country sells for $309,800. If homes appreciate by 5% this year (the average of the forecasts), the homeowner will increase their wealth by $15,490 in 2021 through increased equity. BOTTOM LINE: As you make your plans for the coming year, be sure to consider the equity benefits of home price appreciation as you weigh the financial advantages of buying over renting. When you do, you may find this is the perfect time to enter into homeownership.



$68,800 $53,700









National Association of Realtors


Zelman & Associates



Freddie Mac


Mortgage Bankers Association


Fannie Mae




Average of All Seven

5% Source: Keeping Current Matters

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Source: Keeping Current Matters