How to Overcome the Inventory Crisis

How to Overcome the Inventory Crisis?

Inventory has not increased and prices are on the rise. What does this year look like and what can agents do to stay in the game?

Before we jump into how to overcome where we are in real estate as agents, we need to understand some basic economic principles and how that affects us today.

 

Four Real Estate Cycles

 

Let’s start with the four real estate cycles and what they are.

The first is recovery. This is a tricky phase to identify as this phase takes place after a recession and most people are so burnt out on the effects of the recession to even see recovery on the horizon. This is the best time to buy real estate on the onset. We saw this around 2011-2013.

 

The second phase is expansion. This is where the general economy is improving, job growth is strong and there is an increased demand for space and housing. The expansion phase is when the general public will start regaining their confidence in the economy. This market is where renters and homebuyers will start generating demand again. While the market is on an upswing, it’s advantageous to invest your efforts into developing or redeveloping properties that cater to the current market’s taste and sell for more than market value.

 

Then we move into hyper supply as the third phase. This is where developers and investors get into a frenzy during the expansion phase to ensure that supply meets a growing demand. Eventually it hits a tipping point where supply begins to exceed demand, either from too much inventory on the market or because of a sudden shift in the economy or worldwide that causes fear and stops the demand. This is a great time to us the buy and hold strategy so that you have properties in stock when it’s an ideal time to sell again.

 

The fourth phase is recession. This is one that we’re all too familiar with whether or not you were in real estate during this time. The market crashing in the 2000’s was a combination of the perfect storm, which left the entire nation struggling for many years following. In the case of the 2000’s, subprime loans, an oversupply of inventory, inflated prices and lots of fraud and greed. If you want to understand it in more detail, check out the movie The Big Short. Typically during this phase, supply exceeds demand by a large margin and property owners see high vacancy rates in their rentals. This is a great opportunity to purchase distressed properties and wait until the market recovers to sell.

 

These four cycles typically represent a 7 year period where the market corrects itself.

 

However, since the recession in 2008, we have not seen this.

 

We saw the recession from 2008-2010 where there was a significant number of foreclosures, short sales and vacancies. Then from 2011-2013 we saw recovery and prices steadily increase. We saw expansion start around 2014 and continue through 2019 which is quite a long period for this phase but then we saw hyper supply hit in 2020 during the pandemic. It’s been going for almost two years straight with the largest equity and price increase seen from 2021 until now.

 

Homeowners have averaged a $67K gain in equity just during the pandemic ($300K in San Francisco, but that’s not our market so we don’t need to talk about that ridiculousness). People have seen higher ROI’s in buying and selling during the pandemic than in any other possible investment.

We haven’t seen a correction.

 

So people naturally think, there’s going to be another bubble popping. I agree that something has to give but let’s look at facts and…

 

 

Why this isn’t a bubble like 2008:

 

1. Low inventory
2. Cash – higher downpayments and paying appraisal gaps or removing appraisal contingencies
3. Tight restrictions on lending

Just when I think we may have experienced a slow down, 2020 happened and working remotely changed everything. Feeling “mishoused” became a real thing. This is when people had the right house until the pandemic happened and then everything felt too close for comfort so they no longer “fit” in their homes. Working environments at home and schooling from home made homes feel very tight and people wanted more space. We saw so many “move-up’ buyers that were looking for more space. Pool sales and installs and outdoor activities and remodels skyrocketed. People had to figure out what to do with their space while they were stuck at home and make it comfortable. If they couldn’t afford to move, then they were remodeling.

Florida saw a massive increase in relocations from other states, especially New York (which is typical for retirees but now we were seeing younger and younger families moving from NY earlier than normal) and California. In droves they were moving to Florida. I’ve heard it said and have experienced this in Orlando, but Florida is the new California – I hate that reference but we have the beaches, great weather, low taxes, incentives for small business, and freedoms that many other states do not and did not see during the pandemic that caused a huge exodus from states into ours.

This didn’t help our already low inventory crisis. I remember complaining about low inventory in 2011 and it has only continued decreasing monthly.

 

 

What a healthy market can sustain:

 

 

Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.

A healthy real estate market is a 6 month supply.

Where are we right now: According to the Florida Realtors monthly stats, we are at a 1.0-months’ supply while condo-townhouse inventory was at a 1.2-months’ supply.

Why has it not corrected itself? For the same reason this isn’t a bubble. We don’t have sufficient inventory for all those looking to relocate, stop renting or selling to buy a home.

According to Fortune:
Why is the inventory situation getting worse? It starts with demand, which isn’t letting up. We’re still amid the five-year window (between 2019 and 2023) when every millennial born in the generation’s five largest birth years (between 1989 and 1993) will hit the all-important first-time homebuying age of 30. Homebuilders, who cut back on building after the 2008 financial crisis, simply weren’t ready for this demographic wave that was looming even before the pandemic struck. To make matters worse, homebuilders are now struggling to even fulfill contracts on time as the overwhelmed global supply chain continues to create delays and shortages for everything from garage doors and windows to framing lumber.

There’s another reason inventory is shrinking again: Spiking mortgage rates. Back in December, the average 30-year fixed mortgage rate was at 3.11%. As of Friday, that rate has spiked to 3.85%. In theory, higher rates should cool the market over time. However, this sudden move up in mortgage rates, Bachman says, has corresponded in a short-term uptick in “buyer urgency.” Home shoppers, she says, are rushing to buy now before rates go even higher. Of course, that’s only taking more inventory off the market.

 

 

When can we anticipate a correction?

 

When it will correct – 3-5 catching up with housing and construction. Then we’ll see the inventory finally level to where the expansion phase is and will catch up with the housing shortage. Shortly after that is when I think we should see a balanced market.

Additionally, keep an eye out for interest rates rising and how that affects your buyers from purchasing a home. It will only become more costly over time.

 

Now what?

So what do you need to do now to make sure you still have a real estate career by the end of this year during this inventory shortage never seen before?

 

 

I have 4 simple but career changing ways:

1. This market is aggressive. We need to know what opportunities are available for our buyers. We have rent-to-own programs that we utilize as well as cash offers to help get our buyers the homes they want and compete against cash as cash because we all know FHA and VA don’t stand a chance but conventional

2. Work for your buyers (we know those are in abundance compared to sellers) by finding sellers. Be creative. We’ve contacted Expireds, FSBO’s and sent letters to homeowners of homes that match what our buyers are looking for. Door knocking. For sellers, eXp offers several programs that help set us apart from the rest in terms of listing presentations (Curbio, Express Offers, America’s Home Warranty)

3. Be the real estate expert in your market. Miami/Orlando is huge. You have to make sure you’re not trying to compete with everyone, you want to create a niche and expertise that people will find you. Mayor of your town.

4. Partner with a team or network that will train you on how to submit competitive offers and WIN! (discuss our weekly huddles) Getting ideas and discussing best practices – what has worked, what hasn’t. Feed off the energy and gain training to propel you through the next week
Joining eXp has given us access to tools and trainings we would otherwise have to pay thousands for. Here, it’s part of the culture. It’s what we do for one another since it’s an agent owned brokerage.
– Luxury caravan
– Team Building Mastery training
– Weekly accountability
– Referral system
– Support

For more questions on the real estate market in Central Florida or to SELL or BUY in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

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@WaypointeGroup

7 Things Buyers Need To Know in This Market

It's a difficult market for home buyers, but...

Here are 7 things you should know when buying in this market to help you set the stage for what is going on right now:

  1. You may have to submit 6-10 offers in this market before you get one accepted because of the demand and low inventory. Be patient with your agents!
  2. You may find out it’s pending on Zillow or Realtor.com before your agent tells you. It’s not their fault, they just haven’t received a response from the listing agent because the listing agent was slammed with offers. It doesn’t excuse it on the listing agents part, but understand if they’ve received more than 10 offers, they’re weeding through a lot of information and didn’t get back to your agent before trying to stop showing requests so they just switched it to pending.
  3. You’re competing against cash offers and big hedge fund investment companies. You’ll need to submit a true highest and best, not full price. Unfortunately, that doesn’t fly in this market for highly desirable homes. I’m truly sorry buyers.
  4. Offerpad and OpenDoor have a large percentage of the inventory in Central Florida and they are consistently overpriced by tens of thousands. Most of the time they don’t want to budge on pricing which is why they’ve been on the market so long. They also don’t disclose anything about the property that would be of value to a buyer. Buyer’s just do your due diligence if you pursue one of these as you would any other home.
  5. This is not the time to look for a dream home. This is time to find a realistic purchase that you can redesign later. Just get into a home before rates go up because pricing will not crash.
  6. Be realistic with your expectations. In other words, don’t have as many or you won’t be able to find a house.
  7. Don’t give up, but you will need tough skin. Don’t get married to any one property just in case it doesn’t end up working out.

Unlike any market

This is a market I’ve never seen before ever. As a real estate professional, I’ve seen prices soaring, inventory high, market crash, foreclosures and short sales in abundance, a balanced buyer and sellers market, a buyers market, and then a sellers market with rapidly shrinking inventory…but this by far is the lowest inventory I’ve ever experienced.

 

In 5 counties in Central Florida, we have under 1500 homes for sale. That’s insane. But even so, we continue to get our buyers under contract and into homes.

It’s possible, but please make sure to pay attention to the 7 things a buyer needs to know in this market to succeed.

For more questions on the real estate market in Central Florida or to SELL or BUY in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
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@WaypointeGroup

What is driving up real estate prices

What is happening in real estate

 

Back in July I spoke of something really serious that has only worsened the real estate market since then and has gone completely understated…hedge funds are buying out homes in droves. They are outbidding actual home owners left and right with cash offers above asking.

Who is buying up all the inventory?

 

BlackRock is the world’s largest asset managers. Already owning more than $34 billion in real estate, their goal is to become one of the largest landlords and they are well on their way.

 

According to a NY Times article, BlackRock is buying every single-family house they can find, paying 20-50% above asking price and outbidding normal home buyers. Wall Street’s latest real estate acquisitions have ballooned to roughly $60 billion, representing hundreds of thousands of properties. It’s no wonder home buyers in this market are up against as many as 70 offers on a property and don’t stand a chance against cash offers almost $100K above asking as we’ve seen in homes in the Orlando area.

 

More than 1/2 of the countries properties are owned by institutional investors.

 

In the great recession, we saw over 6 million homeowners lose their home. While many have since purchased a property, large hedge funds like BlackRock took advantage of the opportunity and started sweeping up real estate. Almost two decades later, we have a new generation trying to make their splash in real estate with homeownership only to be pushed out during another type of crisis: inventory.

 

There are so many factors that are affecting low inventory, but the largest is the shortage of laborers and supplies which has in turn affected construction and new inventory which is a necessity in growing markets.

The Effect of Low Inventory

 

The effect of low inventory has created a wild west of sorts for sellers and buyers where sellers are definitely capitalizing on their earnings to an extent that has created buyer fatigue, frustration and really not even being able to keep up with the increase in prices.

 

FEDs have announced an interest rate hike (or two or four), but that doesn’t help solve any problem. In fact, it just worsens the situation for buyers because it will just continue to drive up the expense of purchasing a home.

What We Do

One incredibly helpful thing we do on the listing side and I’ve seen it done for me on the buyers side, is real estate professionals working together to help actual home buyers get into homes instead of companies. 


How? Leverage the offers we receive and give the home buyers a chance at competing to see if they can win. It still gives the seller the earnings they want while allowing the home buyers the ability to compete with large cash offers.


Not every agent does this, but those that want to give home ownership a fighting chance, try.

For more questions on the real estate market in Central Florida or to SELL or BUY in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup

2022 Real Estate Forecast

The 2021 Recap

The last 22 months have been some of the wildest in real estate history, as the COVID-19 pandemic accelerated the speed and intensity of recent trends in Florida and all around the country.

Home prices surged to record-breaking highs. Interest rates dropped to historic lows. On top of that, we saw serious labor shortages and everything from inflation to supply chain issues further affecting the 2021 housing market. This became the perfect storm for sellers and a daunting prospective for homebuyers making it increasingly difficult for younger buyers to purchase their first home.

The 2022 Forecast

We all know that no one can predict what the next year will bring, but here’s what industry experts are saying. Home prices are expected to continue to rise, though at a slower rate than last year. As a result, the 2022 housing market will continue to present challenges for new buyers looking to make their real estate purchase.

For those looking to sell, existing homeowners will likely have another year to capitalize on equity. Or, if not interested in selling, take advantage of rising property values and refinance — if they haven’t already. I would recommend refinancing sooner rather than later as interest rates are said to increase in 2022.

Experts also predict two major 2021 trends: low housing inventory and supply chain issues, both of which will continue to be the major obstacle and challenge for construction and renovations.

What to expect in 2022

Two major topics we’ve been talking about that is said to hit the scene in 2022 is inflation and rising interest rates. Chief economist the National Association of Home Builders, Robert Dietz, said, “For a homebuyer, 2022 is going to require patience and strategy,”

One thing we heard a lot of in 2020 and 2021 were buyers waiting for the market to crash or slow down.
In a recent CNET article, Karan Kaul, senior research associate at the Urban Institute, cautioned buyers saying, “If you think you’re going to wait on the sidelines for the market to cool off, that usually doesn’t work. “Timing” the market is a tricky enterprise, and prices seem unlikely to decrease meaningfully any time soon.”

Quick recap:

Combined with historically low interest rates, a record-breaking number of homeowners were able to tap into their home equity in 2020. As property values surged during the first year of the pandemic, cash-out refinancing levels were at their highest since the 2007 financial crisis.

We’ve seen how this increase in equity for homeowners has become a difficult situation for homebuyers even with the low interest rates, but unfortunately the pricing doesn’t look like it’ll change much in 2022, but interest rates will, making it even costlier for buyers in 2022.

Construction delays and soaring prices

As stated in CNET, “Supply chain disruptions caused by the COVID-19 pandemic continue to delay shipments which impedes new construction. That is only making the market that much more competitive along with the rising price of existing homes across the US. And the number of people looking to buy is also increasing, thanks in large part to millennials entering the housing market in growing numbers.”

Buyers are hitting in the market in droves and even with those willing to wait, there are still plenty out there, including cash investors, that are still flooding the market and surpassing the supply of inventory available.

Additional challenges for new construction, which typically alleviates inventory issues in the real estate market, include a lack of building materials, higher cost of building materials like lumber, appliances, windows and doors, and even garage doors. Further complicating the picture is a sustained labor shortage, particularly for skilled construction workers.
It’s clear that demand will continue to outweigh supply for some time to come. We continue to hear we are 3-5 years behind in construction.

Something to watch for

The Federal Reserve announced that it will wind down bond purchasing and look to raise interest rates next year. Higher interest rates will only make things more difficult for those looking to buy, as they raise both the average monthly payment and the total lifetime cost of a mortgage.

For more questions on the real estate market in Central Florida or to SELL or BUY in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup

Renovating Your Home FAQ

Renovating Your Home? Check Our FAQ’s!

 

1. How do I pick a contractor?

Ideally, you want to build the same kind of relationship with your contractor as you do with your real estate agent: one built on trust that makes you want to go back to that person for any future needs. Your contractor should be a very good listener and communicator. You want them to “get” your vision for your home, and to keep you in the loop every step of the way. Do your due diligence by checking out contractors’ reputations, talking with other clients, and looking at work they have done previously before you make your selection.

2. How much will my project cost?

Of course, the answer depends upon the scope of your project, but in order to get the best estimate from your contractor, take time to write down each detail of your plan so that the contractor can include everything in their estimate. Renovations are famous for taking longer and costing more than originally planned, but this is often because the homeowner makes additions or changes along the way, or they don’t realize that, for example, if you move a wall in your home, you may have to then reroute electricity and outlets. One item often leads to another, so you have to look at everything piece by piece.

3. How long will renovations take to complete?

As we said above, this depends on the amount of work being done– and how many changes are made along the way. The more pre-planning you do, the better estimate your contractor can give you.

4. How do I prioritize projects?

If you are living in your home during renovations, you may want to plan out the project in phases, so you can live out of some rooms while others are being worked in. You may also need to phase projects based on cost and availability of funds.

5. Where do I begin?

You begin by conducting a lot of research. Start a look book for your home, either in a notebook or online, collecting pictures of the look and finishes you want. Talk to different contractors, and visit kitchen, bathroom, appliance, and flooring showrooms to get ideas on selections and pricing.

6. Do I need permits?

Your contractor will know what projects require permitting. Make sure that you do abide by permitting regulations, as failure to secure proper permits can come back to bite you if further work is needed down the road.

7. How much will renovations increase my home value?

Every homeowner hopes that making improvements will increase their home’s value, and this is usually the case, but sometimes what homeowners view as improvement can turn out to be liabilities to future buyers. For example, don’t put so much money into the house that it becomes more expensive than the rest of the neighborhood. And be careful not to add personal style preferences that can’t be easily changed, like ornamental fixtures, radical architecture, or unusual landscape features. 

8. How should I pay for renovations?

If you have the cash to pay for your renovations, that’s certainly a good way to go. Otherwise, you might consider a home equity loan with a manageable monthly payment or a revolving line of credit that you can use for renovations as well as emergencies that may arise later.

For more questions on renovations or real estate in Central Florida or for real estate market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
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@WaypointeGroup

December Market Report – Oviedo

What is happening in Orlando’s real estate market. Here is the rundown and even though the holidays are typically a slower time in real estate that’s not what we’re seeing.

If you have any questions about the market or how we can help you buy and sell in this market, contact us!

For more questions on historical homes in Central Florida or for real estate market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup

Why the Zestimate failed Zillow

The “Zestimate”

Zillow’s Zestimate unfortunately became the go-to reference for US homeowners in terms of the value of their home. This was always something that has frustrated real estate professionals like myself, because we knew it wasn’t accurate. But when Zillow tried to use its algorithm to buy and sell homes, it misread the market in a severe way.

The company’s instant buyer program, which is better known as the iBuyer, launched in 2018 in Phoenix and is where Zillow and their subsidiaries started using algorithms to quickly value, buy, and sell homes. It joined a rapidly growing market in the Arizona city where Opendoor, Redfin, and Offerpad had been buying and flipping homes since around 2014.

The iBuyer

The principle behind iBuying is simple: These companies leverage the power of big data and they estimate the price they think they can sell a property and then offer a really low offer, lower than a traditional buyer, but make it attractive by guaranteeing it’s a cash offer and fast closing, leaving tens of thousands on the table for sellers for the sake of convenience.

Once an iBuyer owns a home, they work quickly to renovate the property and relist it—in theory for a profit. An analysis of millions of home sales across the US between 2013 and 2018 by academics at Stanford, Northwestern, and Columbia Business School found that iBuyers made around 5 percent profit by flipping homes.

Zillow’s Secret

Zillow believed it had the secret to the iBuying world: the Zestimate. They launched this algorithm in 2006, which has created home valuations for millions of homes across the US before it was put to work estimating the possible price of property Zillow itself bought.

John Wake, a real estate analyst around Phoenix since 2003 said: “I don’t know anybody in the spring of 2020 who predicted the market would do what it did. No one foresaw it would take off and become so strong.”

In March 2020, pretty much all activity in most housing markets stopped as the world shut down and economic uncertainty reigned. By November 2020, we saw sales increase as inventory continued to decrease and 2021 saw even more exponential growth, including iBuyers.

What happened?

In early October 2021, Zillow recorded its most active week buying homes in Phoenix, part of its goal to buy 5,000 a month by 2024. We saw the same in Orlando, one of the other markets Zillow targeted consistently. Then suddenly Zillow stopped buying all around the country.

It became clear a month later.

The shift in Zillow

When announcing the company’s third-quarter results earlier this month, Zillow cofounder and CEO Rich Barton said, We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers, the company’s home buying program, would result in too much earnings and balance-sheet volatility.”

Zillow completely halted their iBuyer program and said it would cut 25 percent of its workforce.

Barton told analysts that the premise of Zillow’s iBuying business was being able to forecast the price of homes accurately three to six months in advance. That reflected the time to fix and sell homes Zillow had bought.

But the forecasts proved inaccurate in 2021’s shifting housing market. In the second quarter, Barton said, Zillow actually was able to sell homes for 5.8 percent more than it expected. In the third quarter, though, Zillow sold homes for 5 to 7 percent less than it forecast.

Zillow’s competitors also slowed down buying in October.

Where they failed

Problems for Zillow came when they started purchasing properties above market value based on the Zestimate program only to find that the numbers didn’t hold up and they were quickly bleeding profit.

Nine in 10 homes Zillow bought were put up for sale at a lower price than the company originally bought them, according to an October 2021 analysis by Insider. If each of those homes sold for Zillow’s asking price, the company would lose $6.3 million. Barton admitted that, “Put simply, our observed error rate has been far more volatile than we ever expected possible and makes us look far more like a leveraged housing trader than the market maker we set out to be.”

Zillow says its algorithm, which updates the estimated value of more than 100 million properties by analyzing dozens of variables, including the size and location of a home, isn’t at fault. “We remain confident in the ability of our Zestimate,” a spokesperson says, citing the system’s median error rate for on-market homes of 1.9 percent, and 6.9 percent for off-market homes.

To make the iBuying program profitable, however, Zillow believed its estimates had to be more precise, within just a few thousand dollars, which it’s not. Throw in the changes brought in by the pandemic, and the iBuying program was losing money.

How they could have avoided it

Experts say if Zillow had stayed in the bounds of the algorithm’s valuations, they may not have had a problem, but there are valuations of homes outside of the cookie-cutter homes that Zillow’s algorithms just don’t understand. We’ve seen that in our market over and over. They don’t understand rural properties, custom homes, land value, lakefront vs corner lot without a lake in the same community and so on and so forth.

Many experts in the real estate industry have different thoughts on why it failed. Anywhere from trying to acquire too much at once to having the inability to predict the future home prices and others say they tried to manipulate the pricing with their algorithm in order to control the market and their sales. Either way, their purchasing power ended up hurting their bottom line in the end and now they have to go into recovery mode as they start selling off their current inventory in the next few months.

For more questions on historical homes in Central Florida or for real estate market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup

Don’t expect more inventory | What to expect in 2022

New Median Price

The median U.S. home price just passed $400,000 for the first time ever, according to data from the St. Louis Federal Reserve.

In the third quarter the median home price hit $404,700, jumping nearly 13% since third quarter of 2020, when the median sales price was $358,700.

Though it’s an eye-catching number, the market has been hot of late, and a lack of inventory and high demand means foretold the rise in home prices.

Expected Rise in Prices

According to a recent note from Goldman Sachs, home prices could rise another 16% by the end of next year. Goldman economist Jan Hatzius pointed out that of all the pandemic shortages, the housing shortage might last the longest and that a crash is very unlikely.

According to the latest forecast by Fannie Mae, median home prices are expected to rise another 7.9% between Q4 2021 and Q4 2022.

A recent note from Morgan Stanley showed that the country needs as many as 1.5 million homes to get back to normal and that the pace of real estate availability is three years behind.

“The housing shortage has contributed meaningfully to the record pace of home price appreciation we are currently experiencing,” Morgan Stanley strategists wrote in August. “While the magnitude of the shortage described above means it is unlikely that we will find ourselves with an excess of supply at any point in the near future, the pace at which supply is contracting has slowed.”

Don’t Expect Extra Inventory

Another bump in inventory people were expecting were foreclosures after the forbearance ended. That hasn’t been the case.

Even if default rates jump up there are too many companies sweeping them up directly from banks to make a difference.

Hedge funds with $20B in investments have been buying property in last 20 months which is a lot of the frustration with buyers trying to purchase through financing.

1400 homes are in default nationwide with Fannie and Freddie Mac. This is very very low. It’s great for the economy, but doesn’t help the inventory buyers were expecting around this time.

Most American’s have kept their mortgages current in spite of the pandemic, which is great, but it hasn’t helped inventory as many expected.

Vacancy rates are the lowest they’ve been since 1978.

Normally banks will have trainings for BPO’s and forbearance loans but instead they’re selling to hedge funds and not gearing up for excess bank owned properties which is what we normally see in the market after a bank forecloses on a home.

Hedge funds are snatching up inventory if banks are foreclosing or homes are going into default

Attention Buyers

All of that to say, do not anticipate spike in inventory. If you’re on the fence about buying, don’t be. Home prices will go up and so will interest rates making homes even more expensive than this year.

Additionally, if they do go down, interest rates will go up and still make home buying more expensive in the long run than looking for a property at this time.

For more questions on historical homes in Central Florida or for real estate market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup

8 Things You Need to Know Before Buying a Historical Home

Everyone loves the look and feel of a historical or older home with character, but what they may fail to understand is the potential hidden expense you can’t see. There are some serious items you need to take into account when considering to purchase a historical home.

In this video, I outline in detail the big ticket items you need to get:

1. Inspected
2. Reviewed
3. Quotes

There are 8 major items to consider when purchasing a home to make sure it’s safe and ready for the family to move in.

1. Plumbing – you have to make sure this is up to code and is insurable

2. Electrical – depending on the age of this home, if not updated, this can be a fire hazard you need to watch for

3. Air Conditioning – older homes were not constructed with air conditioning.  There are times when even though owners have added AC units to the downstairs area of a home, they have left the upstairs of a home without AC at all. Instead of putting a new unit up there, it’s worth considering individual units for the rooms as an energy efficient option. 

4. Subflooring – does the home have it? If there is no subflooring, your home may be open to lots of dust and insects coming up through the flooring throughout the seasons. 

5. Cracks – look for cracks inside the house on the walls, curbs..etc. It may be settling but it can be a sign of something much worse and more expensive than you know

6. Foundation – get the foundation of the home checked. If there are cracks in the flooring of the house, this may be a foundational issue. If the home has a crawl space, make sure the joist and footers or beams are solid and have not been damaged by any wood destroying organisms that can gravely affect the home’s foundation and make it unleveled. 

7. Lead-based paint – This is a very common form of paint prior to 1978 and the danger comes in the toxicity, especially for children. This paint chips and in order to prevent any potential danger, it should be tested to make sure it has been removed from the home. 

8. Asbestos – this is a material used in homes that causes poisoning and other dangerous diseases if inhaled. It was commonly used in popcorn ceilings, insulation and ceiling tiles. While it is no longer in use, it was common in older homes, even older homes that were remodeled in the 1960’s or 1970’s. As a result, once an inspection is made, if the inspector has concerns about asbestos in the home, it’s best to hire a company certified in testing and removing asbestos. 

Consider this

While historical homes are lovely and charming, before considering moving into one, make sure you take the precautions necessary to make it safe prior to moving into the home. 

For more questions on historical homes in Central Florida or for real estate market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup

What’s the rest of 2021 look like in real estate?

Millennial home buyers on the rise in 2021

In the first half of 2021, we saw a surging demand from millennials starting families and planning to buy a home.

We know that millions of millennials were looking to buy a home from 2022 to 2025, but decided to make the move earlier than their original home buying timeline and started the process now.

I mean, with interest rates as low as they are, can you blame them? On top pf that, the rental market increased in rental prices more than the housing market did in equity. The demand for rental properties and lack of rental inventory also helped prompt these homebuyers to start the search faster when they did the math and realized it was more affordable to buy a home than rent, if in fact they can get into a house, again also due to inventory shortage.

This also happened during what is typically the hottest season for home buying in general so it made the surge even more obvious.

Where we are now

Heading into the fall, we usually see prices drop and the market slow down, but that hasn’t been the case. Buyers are disappointed to see that while prices have stabilized a bit, there are still multiple offers on homes and still going above asking.

Wise sellers are pricing the homes competitively to drive more buyers to submit offers, while we’ve seen other sellers overprice their homes only to see it stay stagnant in this market and have to drop their prices until they do in fact get an offer. By then, buyers think there is something wrong with the home when it’s been on the market over 3 weeks.

In the Oviedo market, a home doesn’t last longer than 7 days on the market.

Buyers waiting for the market to change

While the enthusiasm of those who have been shopping for a new home for awhile might fade, and we have definitely experienced buyer fatigue in this market, there are still tons of new buyers entering the market with down payments and closing costs ready to compete.

I’ve spoken to many prospective buyers that are waiting for a dip or a drop in the market and while I’m hopeful for them, the interest rates will go up if market prices dip. If that’s the case, home buyers will be spending more for a home due to the higher interest rate than locking into a home a little bit of a higher price with the low interest rates available right now.

Market Prediction 

The market shift people are waiting for isn’t what they think. Instead of a surge in prices, we’re going to see a stabilization of prices. Inventory isn’t coming quick enough through new construction and people that own houses don’t want to move unless they absolutely have to.

That has placed us where we are with low inventory, high demand, but the benefit of a low interest rate that continues to be the light at the end of this search for home buyers.

We don’t anticipate a full switch in the housing market until sometime in 2022 where it would be considered favoring buyers, but even if that is the case, it doesn’t guarantee locking in a low interest rate.

Most of us real estate professionals consistently predict the same thing. If the market softens next year, it’s just stabilizing, not dropping. We’re going to be in recovery mode for many years and until new construction and inventory opportunities open up in high demand markets, it’s not really going to change too drastically.

It is good to point out that while most major cities and suburban markets, especially in Texas, Florida and Tennessee have seen significant price appreciation due to COVID and relocations, some other major cities have had serious issues trying to sell, like New York, but people are slowly making their way back to the Big Apple.

While the real estate market has largely been hot across the U.S., local market conditions vary and will continue to do so. If you’re planning to buy or sell a property this year, give me a call so we can let you know what’s going on at a hyperlocal level.

For more questions on the market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.

Follow us on Instagram:
@RealtorJenelle
@WaypointeGroup