What is clear is that the current housing market doesn’t follow the traditional paths it had traveled during the years 1999-2019. The pandemic changed all of that. But behind the scenes, what was slowly taking place was the erosion of available existing homes for sale, and this became the tip of this market’s spear.
For years the process of buying a home did not involve the issue of inventory scarcity. Now it appears to be with us for a few more years.
But inventory is no longer the greatest determining factor within this robust market. Affordability is now the most powerful force that has limited and priced many buyers temporarily out of the market.
Since October 2018 to June 2021, the median price of a single-family home sold in Monmouth County, New Jersey has gone from $420,000 to $625,000, representing a stunning 35% increase.
The prodigious increase in the median price, compounded by the attrition of the inventory of homes for sale, has made buying a home a very difficult proposition.
The shortage of building supplies has also impacted the constriction of the number of new homes built and also their prices. Sales of new single-family homes fell to a rate of 670,000 from the estimated 724,000 that was projected, according to the U.S. Census Bureau.
Some experts believe that the significant appreciation of homes put many newly constructed homes out of the reach of many buyers.
Supplies and building materials, specifically lumber, increased over 300% during the pandemic, but has since fallen to only 75% above its 2019 average. The shortage of lumber is not only a byproduct of the ability of lumber mills to keep up with the demand but also an issue between Canada and the United States, which affects the amount of lumber coming in from Canada to America.
There have even been shortages in terms of appliances available. The result is that the number of new home sales have dropped 6.6% from projected levels.
Inventory of new homes has increased from May to June from 5.5-month supply to a 6.3-month supply. But this is only for new homes. Existing home inventories continue to experience significant shortages.
A recent S&P CoreLogic Case-Shiller report indicated that May 2021 prices broke all records for existing home sales. The national average for the S&P CoreLogic Case-Shiller report indicated that home prices for existing homes climbed 16.6% year-over-year in May 2021. Some cities, such as Phoenix, San Diego and Seattle, did significantly better, reporting increases of 25.9%, 24.7% and 23.4%, respectively. But even laggard markets such as Chicago, Cleveland and Minneapolis still reported gains of double digits.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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