Eugene Oregon Real Estate Blog

Good Monday Morning!

If you think that mortgage interest rates have taken off and are less attractive right now.  Think again!  Mortgage interest rates remain attractive and at extremely low rates.  I know, this has contributed to fueling the national housing market and home prices are very high.  But, when rates are as low as they are today, it still gives you buying power.  There is no guarantee that we are going to see any substantial reduction in home prices any time soon.  The reality is that right now is still a great time to purchasse a home.  The process may be a bit more difficult, but years from now when rates have increased you will be very happy that you made the decision to buy when you did.  The following is an update on current mortgage rates.

Borrowers can still take advantage of some of the lowest mortgage rates of all time. For the fifth consecutive week, the 30-year fixed-rate mortgage has remained below 3%. Also, the 15-year fixed-rate mortgage averaged 2.10% this week, an all-time low, Freddie Mac reported.

“As the economy works to get back to its pre-pandemic self, the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time,” said Sam Khater, Freddie Mac’s chief economist.

In 2019, mortgage rates averaged 3.94%, 4.54% in 2018, and more than 6% in 2008. That said, “expect mortgage rates to modestly rise in the following months as most of the economic indicators will start to stabilize,” Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, said on the association’s Economists’ Outlook blog. Lawrence Yun, NAR’s chief economist, is predicting the 30-year fixed-rate mortgage to increase to 3.3% by the end of the year and average 3.6% in 2022.

Freddie Mac reports the following national averages with mortgage rates for the week ending July 29:

• 30-year fixed-rate mortgages: averaged 2.80%, with an average 0.7 point, rising from last week’s 2.78% average. Last year at this time, 30-year rates averaged 2.99%.
• 15-year fixed-rate mortgages: averaged 2.10%, with an average 0.7 point, dropping from last week’s 2.12% average. A year ago, 15-year rates averaged 2.51%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.45%, with an average 0.3 point, falling from last week’s 2.49% average. A year ago, 5-year ARMs averaged 2.94%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining a mortgage.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

1113 Stevi Shay Ln, Eugene, OR 

Price: $335,000    Beds: 3    Baths: 2.5    Sq Ft: 1620

This cute cottage style home is in a convenient River Road location. The vaulted & high ceilings and ample windows make it feel light & airy throughout. Main level master suite and laundry room. 3 bedrooms plus a loft and 2.5 bathrooms are well laid...View this property >> 

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Good Monday Morning!

I am often asked, what is the best way to pull money from home equity?  There are many options, but the Heloc (Home Equity Line Of Credit) is typically the best option at this time.  The following is an article form "CNBC" that talks about some options for tapping into the newly acquired equity that most homeowners now have.

Soaring home prices are making many homeowners wealthier and wealthier.

Those with mortgages — about 62% of all properties — saw their equity jump by 20% in the first quarter from a year earlier, according to CoreLogic. That represents an average gain of $33,400 in just that one year period.

Altogether, the amount of available, tappable equity has never been higher. As of the first quarter, homeowners held $8.1 trillion in equity to tap, the largest amount ever recorded, according to Black Knight, a mortgage technology and research firm.

Further, nearly half of all tappable equity, or the amount a homeowner can borrow against before hitting a maximum 80% combined loan-to-value ratio, is held by borrowers paying an interest rate of 3.75% or higher, Black Knight also found.

That means homeowners have plenty of refinance options, whether they want to lower their monthly payments, take cash out — or both.

Still, it’s not always easy to access that money. Since the start of the Covid pandemic, the entire industry tightened access to mortgages and several large banks stopped offering home equity lines of credit and cash-out refinances altogether to lower their exposure — or risk — during uncertain economic times.

HELOC vs. cash-out refinance

Up until last year, a home equity line of credit, or HELOC, which is a revolving line of credit but with better rates than a credit card, had been a popular way to borrow against the equity you’ve accumulated in your home.  

The average interest rate on this type of credit is just over 4%, according to Bankrate.com. Meanwhile, credit cards charge nearly 16%, on average.

Some banks do still offer this option, although most have tightened their standards, at least somewhat. That means homeowners must have higher credit scores and lower debt-to-income ratios.

“Generally, the higher your credit score, the easier it is going to be to access home equity,” said LendingTree chief economist Tendayi Kapfidze.

There is, however, a better way to free up some of that money, he added.

“Because interest rates are so low, your best bet is going to be cash-out refinance,” Kapfidze said. “The rates are lower than a home equity loan rate and lower than your existing mortgage rate.”

Homeowners may also be able to deduct the interest on the first $750,000 of the new mortgage if the cash-out funds are used to make capital improvements (although since fewer people now itemize, most households won’t benefit from this write-off).

This works well when mortgage rates fall because even though you are refinancing your current mortgage and taking out a bigger mortgage, you are lowering your interest payment at the same time.

“Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point,” said Sam Khater, Freddie Mac’s chief economist, in a recent statement.

“If you haven’t been looking at interest rates over the last year, now would be a great time to check that out,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

On a 30-year mortgage, rates below 3% are still available.

“Even those who received pretty low rates are finding themselves refinancing at lower rates today,” Boneparth said.

The most preferable terms go to borrowers with high credit scores.

“Most people have good enough credit, but the best rates go to those with 740 or above,” said Greg McBride, chief financial analyst at Bankrate.com.

To be sure, there are some limitations for cash-out refinances, as well.

For starters, most lenders will require that you keep at least 20% equity in your home, if not more, as a cushion in case home prices fall.

“This isn’t 2005, you can’t pull out every last nickel you have in the home,” McBride added.

Further, a cash-out refinance often means extending your repayment term, which can squeeze your monthly budget in the long run, along with having to pay closing costs up front.

As a rule of thumb, “if you can reduce your rate by half to three-quarters of a percentage point, it’s worth looking at,” McBride said. “That’s usually the tipping point.”

Then, “you can earn back your costs in a year and a half,” he said, and “refinancing becomes very compelling.”  

And finally, refinancing opportunities could be short-lived. Mortgage rates won’t stay low forever, particularly as inflation ticks higher.

“That should add some urgency to getting a refinancing done sooner than later,” McBride said. “The economy is heating up — those are the conditions that produce higher mortgage rates.”

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

37791 Wheeler Rd, Dexter, OR 

Price: $334,500    Beds: 2    Baths: 1.0    Sq Ft: 840

Wonderful hidden gem, close in country property (15 min to Eugene). Meticulously cared for home on over 1/3 acre with fantastic views of the hills. Open floorpan featuring a fireplace, luxury vinyl flooring, newer ductless heat pump, oversized garag...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The following article is a recent article from"Realtor.com" that speaks about the recent high inflation that we have experienced within the U.S. housing market.  It's worth the time to read, because it gives a perspective on how the numbers are derived by the governement and some insight into what the true numbers may be.

Fast-rising housing costs have helped cause the largest increase in inflation since 2008. But the way that government statisticians track the price of consumer goods may be missing just how explosive home-price growth really has been in recent months.

The cost of shelter rose by 0.5% between May and June, according to the latest edition of the monthly consumer price index released Tuesday by the Bureau of Labor Statistics. Compared with last year, however, shelter costs were up 2.6%.

Altogether, the rise in housing prices accounted for roughly a fifth of the overall increase in inflation in June, a reflection of how heavily government economists weight this spending category.

But much of that increase was actually driven by the rising cost of hotels and motel stays, which are factored into the overall shelter figure. Between May and June, the cost of a hotel room increased nearly 8%. Comparatively, housing costs for renters and homeowners rose 0.2% and 0.3% respectively, per the government’s inflation measure.

If those figures seem off based on your own experience of buying a home or signing a new lease as of late, it’s not a surprise. Not everyone agrees on the rate of house-price growth.

The latest edition of the consumer price index indicated housing prices have risen 2.6% over the past year, while other reports suggest home prices are up more than 13%.

Other data suggested a much faster pace of home price appreciation and rental growth, well in excess of that level.

The most recent report from the Case-Shiller Home Price Index for April showed that home prices were up 14.6% nationally, which marked the highest increase in the more than 30 years of S&P CoreLogic Case-Shiller data.

So how does the CPI calculate housing? First, housing units themselves are not included in the CPI market basket.

Second, rental data to establish how prices are changing are collected every six months. The calculations for most other CPI items are collected monthly or bimonthly.

“Like most other economic series, the CPI views housing units as capital (or investment) goods and not as consumption items,” the Bureau of Labor Statistics says. “Spending to purchase and improve houses and other housing units is investment and not consumption.”

“The cost of shelter for renter-occupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes,” the bureau adds.

The government pollsters ask homeowners: “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?”

And they ask renters: “What is the rental charge to your [household] for this unit including any extra charges for garage and parking facilities? Do not include direct payments by local, state or federal agencies. What period of time does this cover?”

Housing isn’t like other goods

“The rate of house price appreciation is not akin to inflation,” said Mark Fleming, chief economist at title insurance company First American Financial Services FAF.

For a start, housing is a very basic necessity. “Demand for shelter doesn’t go away — it just moves around,” Fleming said. In other words, if the price of airfares surges 2.7%, as it did over the past month, families could decide against going on that summer getaway.

That choice isn’t so simple when it comes to housing. As the cost of shelter increases it can have a “cascading effect on extremely low-income renters,” said Andrew Aurand, vice president for research at the National Low Income Housing Coalition.

Some 9.2 million ‘extremely low-income’ renters are spending more than a third of their income on shelter-related expenses

Andrew Aurand, vice president for research at the National Low Income Housing Coalition

Research from Aurand’s organization has shown that more than 9.2 million “extremely low-income” renters are cost burdened by their housing, meaning they spent more than a third of their income on shelter-related expenses. Many of these households spend upwards of 50% on housing, leaving little money behind for other purchases.

The alternative for these households would be losing the roof over their heads. In recent years, that has become the reality for many Americans. A 2019 study released by the Trump administration estimated that more than 500,000 people sleep outdoors each night across the country, while many more couch surf or utilize shelters for unhoused people.

Meanwhile, for people who own their homes, buying a property isn’t the same as buying, say, a banana. Owning that banana won’t benefit you financially in the long-run, whereas with a house you can expect to see its value increase and to profit off that. But a home isn’t a pure investment asset like a stock — it’s a mix of both.

Home prices can rise both because the actual structure itself may be worth more — thanks to the rising cost of labor and lumber — but also because people see value in it as a capital investment.

Home prices can rise both because the actual structure itself may be worth more — thanks to the rising cost of labor and lumber — but also because people see value in it as a capital investment.

As a result, there can be a mismatch in the way economists or government statistician view rising home prices, and what that means to a consumer.

“In a market environment where prices are rising so quickly to buy a home the economist would say that’s the increase in the price of the capital good,” said Robert Dietz, chief economist at the National Association of Home Builders. “But to the buyer, it represents a higher cost of living.”

Why housing inflation is different

People experience inflation vis-à-vis housing differently to most other products, and that makes it a challenging to measure.

For the typical homeowner, their housing costs likely haven’t changed too much over the past year.

“If you have a fixed mortgage, on your home, year over year, how much does your cost of living in that home change? Not very much,” Fleming said. “The only things that change year over year are your escrows for taxes and insurance.”

Even with renters, the price of housing doesn’t shift higher or lower from month to month. That’s why the Bureau of Labor Statistics collects housing data more infrequently than most other items in the CPI basket of goods.

For renters and buyers, you encounter the changing cost when something about your living arrangement changed: When you move to a new home, sign a new lease or refinance your mortgage.

Americans need to know how much housing costs are rising or falling — not the least of which because residential real-estate makes up such a huge portion of the nation’s economy.

But Americans do need to know how much housing costs are rising or falling — not the least of which because residential real-estate makes up such a huge portion of the nation’s economy.

The government’s Consumer Price Index calculates the “imputed rent” — essentially the amount a homeowner is paying for their housing rather than paying a landlord.

If it did not do so, GDP would actually fall, Dietz said, “because money that would be a rental payment in the marketplace paid by a renter suddenly disappears.”

To bridge this challenge, the government relies on survey data to produce its estimates of housing costs for renters and homeowners. In renters’ cases, they are simply asked how much they pay for housing.

But owners aren’t asked what their mortgage payment is — after all, not everyone has a mortgage. Instead, that’s why they are asked to estimate how much they would be able to charge for rent to lease out their current home.

Government statisticians survey the same cohort of Americans periodically to produce their findings and track changes over time to estimate housing costs.

“Inflation and [changes in] housing prices have generally been matched up,” said Jonathan Needell, President and Chief Investment Officer of KIMC, a private real-estate investment company. He added that rising housing prices has “exceeded inflation in some circumstances.”

Some researchers have argued, however, that this approach can also understate and/or be slow to identify true inflation occurring in the housing market.

A new analysis from Fannie Mae showed that there is typically a lag between when home prices are actually rising, and when that price growth is reflected in inflation reports like the consumer price index.

The role played by COVID-19

The shifts in housing preferences and needs caused by the COVID-19 pandemic has also complicated our ability to gauge the effect of inflation in the housing market.

Wealthier Americans, many of whom suddenly found themselves able to work remotely, chose to move away from major cities into larger and cheaper homes in the suburbs, often saving money in the process. As a result, rental rates declined in pricier neighborhoods.

But in more affordable areas, rents actually increased. Americans who lost their jobs because of the pandemic rushed to find cheaper housing, pushing rents higher for the least expensive apartments and homes in the suburbs.

Those effects are beginning to dissipate, but will continue to weigh on official measures like the consumer price index given the time lags that occur.

Americans who lost their jobs because of the pandemic rushed to find cheaper housing, pushing rents higher for the least expensive apartments and homes in the suburbs.

So is housing quickly becoming more expensive? The answer, economists agree, is yes. First American Financial Services has its own measure, the Real House Price Index, which compares nominal-price gains with Americans’ ability to afford to purchase a property based on the prevailing interest rates and household income.

For a period of time between 2018 and the beginning of 2020, the Real House Price Index was falling, because Americans’ buying power was rising faster than home prices, Fleming said. That’s not the case anymore.

“Deflation has turned into inflation, not because interest rates have gone up — they’ve only gone up a little bit — but because house prices are just crazy,” Fleming said.

The reason home prices are rising so fast is fairly simple. After the Great Recession, home-building activity all but drew to a standstill as the construction industry worked to recover.

‘Deflation has turned into inflation, not because interest rates have gone up — they’ve only gone up a little bit — but because house prices are just crazy.’

Mark Fleming, chief economist at First American Financial Services

As a result, the construction of new homes did not keep pace with population growth and the formation of new households.

That left the housing market with a serious shortage of homes, just as millennials have begun getting married and having kids — traditional hallmarks of home-buying interest.

With the pandemic, the shift to remote working and low interest rates have only exacerbated things.

The primary solution to address runaway inflation in housing will be to build more homes — something that’s easier said than done. “Some of the challenges that we face on the supply side of the residential construction industry are going to persist well into 2022,” Dietz said.

Those challenges run the gamut from the high cost of lumber to the lack of skilled workers to complete construction projects. Another factor: Zoning regulations across the country prevent the construction of more dense housing in many cities, effectively driving up home prices and rents in the process.

Finally, new-home construction alone won’t make matters easier for all Americans. Because of the high costs, it’s easier for builders to construct more expensive homes, even though the demand and competition is strongest for entry-level properties.

Over time, that increased concentration in the bottom-tier of the housing market is driving up prices for those who can least afford it.

There’s this argument that if you just build more supply to meet the demand, it will eventually help extremely low and very low-income renters,” Aurand said. “But the market is not going to adequately serve mostly extremely low-income renters.”

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

4580 Spring Meadow Ave., Eugene, OR 

Price: $425,000    Beds: 3    Baths: 2.0    Sq Ft: 1489

This well kept single level home in a quiet Santa Clara neighborhood will not disappoint! Great room concept w/ vaulted ceilings in the family room. Spacious kitchen w/ breakfast bar, stainless steel appliances, granite counters & large pantry. Mast...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The Real Estate market in the Eugene and Springfield area remains strong and is being fueled by low mortgage interest rates and a constant stream of people moving into our community.  How long this robust sellers market continues is anyones guess.  There is possible change on the horizon as several major lenders have pulled back from offering home equity loans.  The last tiime we saw this take place was 2008, just prior to the great recession.  These lenders are stating that the current housing market is grossly over priced.  Their pull back could signal a coming adjustment. Here are the home sale numbers for June of 2021.

New listings (633) increased 23.6% from the 512 listed in June 2020, and increased 4.1% from the 608 listed in May 2021.

Pending sales (521) decreased 6.0% from the 554 offers accepted in June 2020, and decreased 6.0% from the 554 offers accepted in May 2021.

Closed sales (516) increased 29.3% from the 399 closings in June 2020, and increased 31.0% from the 394 closings in May 2021.

Inventory and Market Time

Inventory held steady at 0.7 months in June. Total market time increased to 18 days.

Year-To-Date Summary

Comparing the first six months of 2021 to the same period in 2020, new listings (2,990) increased 6.0%, pending sales (2,598) increased 9.2%, and closed sales (2,285) increased 17.2%.

Average and Median Sale Prices

Comparing 2021 to 2020 through June, the average sale price has increased 20.6% from $343,700 to $414,600. In the same comparison, the median sale price has increased 20.3% from $320,000 to $385,000.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

33749 Meyer Rd, Cottage Grove, OR 

Price: $595,000    Beds: 2    Baths: 2.0    Sq Ft: 1803

Gorgeous one level home on 5.5 irrigated acres. Over 3 acres of pasture. Water rights to pump water from year-round creek. Lovely home with great room, large open kitchen, huge laundry sewing/craft room with tons of cabinet storage. 36'x44' shop wit...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Demand for housing here in the Eugene/Springfield area is not slowing down.  But, nationally, the demand for new housing has slowed and it could be temporary or it could also be the start of a downturn.  The price of new homes has continued to increase due to many factors and this certainly could be contributing to a slowdown.  The following is an article from"Realtor.com" that gives details on the recent reduction in new home sales.

The numbers: New home sales dropped by a larger-than-expected amount, falling to the lowest level in a year.

New home sales occurred at a seasonally-adjusted annual rate of 769,000 in May, the U.S. Census Bureau reported Wednesday. The figure represented a 5.9% drop from the previous month’s revised figure, but was up 9.2% from a year ago.

The new home sales report often sees very significant revisions in subsequent months following the initial estimates. The U.S. Census Bureau noted that the change in new home sales between March and May could be 18.6% larger or smaller than what it is currently reporting, a wide confidence interval.

The median forecast of economists polled by MarketWatch was 859,000.

What happened: The decline in sales was mostly driven by a 14.5% drop in the South. The Northeast saw the volume of new home sales increase 33%, while the West witnessed a 4.8% uptick. Sales were flat in the Midwest.

The number of homes for sale at the end of the month was up 4.8% from April. The total inventory of new homes for sale represented a 5.1-month supply, the highest since last May. The median sales price for a new home was over $374,000, up from around $365,000 the month prior.

The big picture: Constraints in the market for existing homes continue to provide a runway for new home sales to take off. “Right now, we view the shortage of housing inventory as the primary limiting factor for home sales as we start looking forward into the second half of the year,” said Ruben Gonzalez, chief economist at Keller Williams.

Many home builders in recent months were forced to pause, or in some anecdotal cases completely cancel, project because of the short supply of lumber used in construction. The lumber shortage pushed prices for homes higher and squeezed the margins at construction firms. The shortage stemmed from production backlogs at sawmills—many mills opted to ramp operations down last spring as the COVID-19 pandemic hit the economy, only to be caught flat-footed months later when the U.S. housing market roared back to life.

But now, lumber prices appear to be coming back down to earth, which should reduce some of the supply-chain related pressures builders were facing and allow them to resume their operations. That said, builders still face headwinds, including labor shortages, that will make it hard to really ramp up the pace of sales and construction.

What they’re saying: “As far as the drop in mortgage applications for home purchase goes, the downtrend is most likely primarily due to supply-constrained weakness in existing home sales, as demand for new homes has held up comparatively well even as mortgage applications for home purchase have dropped,” said Joshua Shapiro, chief U.S. economist at independent global economic and financial consulting firm Maria Fiorini Ramirez.

“Aside from surging home prices squeezing some potential buyers out of the market, I do not have a good explanation for the latest fall,” said Stephen Stanley, chief economist at Amherst Pierpont. “I’m guessing the May reading is mostly an anomaly.”

“Sales of newly constructed homes are held back by the uncertainty that builders face. Prices for lumber, drywall, doors, and roofing products are all higher than they were a year ago. As builders pass along those costs, they encounter resistance from would-be buyers. The rising costs for construction materials come at a bad time, as vigorous construction is the solution to the housing shortage,” said Holden Lewis, home and mortgage expert at personal-finance website NerdWallet.

Market reaction: The Dow Jones Industrial Average and S&P 500 index were both up slightly following the report’s release, while homebuilder stocks—including D.R. Horton, Lennar Corp. and PulteGroup—fell in morning trading.

 Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

33749 Meyer Rd, Cottage Grove, OR 

Price: $595,000    Beds: 2    Baths: 2.0    Sq Ft: 1803

Gorgeous one level home on 5.5 irrigated acres. Over 3 acres of pasture. Water rights to pump water from year-round creek. Lovely home with great room, large open kitchen, huge laundry sewing/craft room with tons of cabinet storage. 36'x44' shop wit...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Demand for housing here in the Eugene/Springfield area is not slowing down.  But, nationally, the demand for new housing has slowed and it could be temporary or it could also be the start of a downturn.  The price of new homes has continued to increase due to many factors and this certainly could be contributing to a slowdown.  The following is an article from"Realtor.com" that gives details on the recent reduction in new home sales.

The numbers: New home sales dropped by a larger-than-expected amount, falling to the lowest level in a year.

New home sales occurred at a seasonally-adjusted annual rate of 769,000 in May, the U.S. Census Bureau reported Wednesday. The figure represented a 5.9% drop from the previous month’s revised figure, but was up 9.2% from a year ago.

The new home sales report often sees very significant revisions in subsequent months following the initial estimates. The U.S. Census Bureau noted that the change in new home sales between March and May could be 18.6% larger or smaller than what it is currently reporting, a wide confidence interval.

The median forecast of economists polled by MarketWatch was 859,000.

What happened: The decline in sales was mostly driven by a 14.5% drop in the South. The Northeast saw the volume of new home sales increase 33%, while the West witnessed a 4.8% uptick. Sales were flat in the Midwest.

The number of homes for sale at the end of the month was up 4.8% from April. The total inventory of new homes for sale represented a 5.1-month supply, the highest since last May. The median sales price for a new home was over $374,000, up from around $365,000 the month prior.

The big picture: Constraints in the market for existing homes continue to provide a runway for new home sales to take off. “Right now, we view the shortage of housing inventory as the primary limiting factor for home sales as we start looking forward into the second half of the year,” said Ruben Gonzalez, chief economist at Keller Williams.

Many home builders in recent months were forced to pause, or in some anecdotal cases completely cancel, project because of the short supply of lumber used in construction. The lumber shortage pushed prices for homes higher and squeezed the margins at construction firms. The shortage stemmed from production backlogs at sawmills—many mills opted to ramp operations down last spring as the COVID-19 pandemic hit the economy, only to be caught flat-footed months later when the U.S. housing market roared back to life.

But now, lumber prices appear to be coming back down to earth, which should reduce some of the supply-chain related pressures builders were facing and allow them to resume their operations. That said, builders still face headwinds, including labor shortages, that will make it hard to really ramp up the pace of sales and construction.

What they’re saying: “As far as the drop in mortgage applications for home purchase goes, the downtrend is most likely primarily due to supply-constrained weakness in existing home sales, as demand for new homes has held up comparatively well even as mortgage applications for home purchase have dropped,” said Joshua Shapiro, chief U.S. economist at independent global economic and financial consulting firm Maria Fiorini Ramirez.

“Aside from surging home prices squeezing some potential buyers out of the market, I do not have a good explanation for the latest fall,” said Stephen Stanley, chief economist at Amherst Pierpont. “I’m guessing the May reading is mostly an anomaly.”

“Sales of newly constructed homes are held back by the uncertainty that builders face. Prices for lumber, drywall, doors, and roofing products are all higher than they were a year ago. As builders pass along those costs, they encounter resistance from would-be buyers. The rising costs for construction materials come at a bad time, as vigorous construction is the solution to the housing shortage,” said Holden Lewis, home and mortgage expert at personal-finance website NerdWallet.

Market reaction: The Dow Jones Industrial Average and S&P 500 index were both up slightly following the report’s release, while homebuilder stocks—including D.R. Horton, Lennar Corp. and PulteGroup—fell in morning trading.

 Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

33749 Meyer Rd, Cottage Grove, OR 

Price: $595,000    Beds: 2    Baths: 2.0    Sq Ft: 1803

Gorgeous one level home on 5.5 irrigated acres. Over 3 acres of pasture. Water rights to pump water from year-round creek. Lovely home with great room, large open kitchen, huge laundry sewing/craft room with tons of cabinet storage. 36'x44' shop wit...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

I recently read this article in "Realtor Magazine" about the "Top Ten Things Effecting The Real Estate Market This Year".  I found it interesting and wanted to pass it along.  Here is that article.

Remote work and mobility are expected to have the most significant impact on real estate over the next year, according to The Counselors of Real Estate’s list. The group identified current and emerging issues expected to have an influence over real estate in the 2021-2022 cycle. Remote work and mobility and its influence over commercial buildings globally was named as the top issue, followed by technology and ESG (Environment, Social, and Governance).

“The pandemic was a stress test, revealing vulnerabilities, appetites, and new and increased risks,” says Michel Couillard, global chair of The Counselors of Real Estate. “These themes present themselves in the 2021-2022 Top Ten Issues, which are highly interconnected and indicative of a newly changed and further evolving real estate environment. We have been awakened to some familiar but nascent areas of importance, namely cybersecurity, supply chain, and price instability. None of these are new concepts, but in a span of months or even just weeks, we saw high profile hacks, shortages of resources like microchips, lumber and labor, and rising prices across the board.”

Here’s a closer look at the top 10 issues on CRE’s list for 2021-2022:

1. Remote work and mobility

The pandemic greatly disrupted the workplace as many employees began to work remotely—and still are more than a year later. Commercial properties may need to be repositioned as the workplace adapts to more flexible and even shareable spaces.

“As we emerge from COVID-19 into a new world replete with local and global disruptions alike, our industry has been forced to recognize that adaptability and resiliency are paramount in real estate markets,” says Couillard. “It is undeniable that the pandemic’s disruption significantly impacted human behavior in how and where people have chosen to work. Now, with an escalating return to ‘business as usual,’ and workers beginning to return to offices, landlords, and companies nevertheless are facing repositioning of the workspace and the benefit of easily adaptable and shareable spaces. …. Property owners and managers should be flexible in order to accommodate these demand-driven changes in the desired use and location of space."

2. Technology acceleration and innovation

The Counselors of Real Estate also ranked the acceleration and adoption of technology as having the second greatest impact on the real estate industry. “The stressors were not about new tech, but about the acceptance of it,” Coulliard says. “Lockdown-driven changes in our work, the economy, in social structures, and in our personal behavior forced the industry to put any earlier reluctance aside.” Growing technology themes include artificial intelligence, machine learning, the Internet of Things, and cybersecurity, the report notes.

3. ESG at a tipping point

Environmental, social, and governance (ESG) initiatives are growing. In 2020, ESG funds more than doubled net new money intakes. “The growth in recent years is fueled by multiple drivers, including consumer shifts, regulatory requirements, trillions of dollars of wealth transferring to generation Z and millennials committed to philanthropic living, a blurring of work and societal expectations, and a full sprint to attract and retain top talent,” the report notes.

4. Logistics

“Whether it’s a port, rail line, pipeline … manufacturing facility, warehouse, farm, ranch, or grocery store, all these real estate assets are a critical segment in the supply-chain funnel that is logistics,” the report notes. “How logistics is functioning impacts the utilization of commercial real estate. Redundancy and the ability to process disruption are two key elements required to support the fast-moving, high-volume requirements of modern-day logistics in the ‘shop-online-and-deliver-to-me’ era in which we find ourselves.”

5. Infrastructure

The Civil Engineers estimates the U.S. infrastructure funding gap in 2021 to be $2.6 trillion, a 24% increase compared to 2017. “The COVID-19 pandemic, climate change, and heightened societal interest in social and economic equity have redefined infrastructure imperatives beyond the significant ongoing necessity for improved roads, bridges, airports, ports, mass transit, and other traditional infrastructure needs,” the report notes. A proposal on Capitol Hill sets out to allocate $110 billion in new spending to bridges and roads, $65 billion to expanding access to broadband, and $48.5 billion to public transit, and more. Stay updated here: NAR resource page on transportation and infrastructure in real estate

6. Housing supply and affordability

The National Association of REALTORS® and the Rosen Consulting Group released a report last week calling for a “once-in-a-generation” response to address decades of underinvestment and underbuilding in the housing market. The nation has faced a shortfall of 5.5 million to 6.8 million housing units since 2001, according to the report. Housing groups are calling on lawmakers to expand access to resources, remove barriers to incentivize new development, and more. Read more from NAR’s report on this: ‘The State of America’s Housing Stock Is Dire’

7. Political polarization

“Political friction is holding back America’s economic productivity,” the report notes. “We are squandering resources as we try to address problems that arise from the partisan divide rather than problems confronting us as common issues …. And the real estate industry’s well-being is a function of our economic growth.”

8. Economic structural change

Economic growth is mostly an unknown. As the report notes, how do we assess the real potential of the economy for sustainable growth? What numbers indicate a true trend and which are merely adjustments from the low bottom of the second quarter of 2020? Which behavioral changes made by U.S. households in the pandemic will persist? The ability for businesses to anticipate what’s next is met with challenges. For example, “even though real estate investors may reasonably expect an uptick in demand in the coming year, the ability to anticipate when occupancy and rent will rise frustrates underwriting,” the report notes. “We are observing many investors increasing their focus on property management aimed at retaining tenants and defending cash flow, while selectively seeking ‘value-add’ properties amenable to active asset management. The thinking is ‘focus on what you can control’ during this period where macro-level uncertainty is the governing headwind at the policy level in terms of the structural problems in this economy.”

9. Adaptive Reuse 2.0

The term is not new but the focus is getting bigger. CRE refers to Adaptive Reuse 2.0 as “The Neighborhood Approach.” It aims to address the challenges of what to do with defunct suburban malls and thousands of empty big-box retail stores that are surrounded by desirable and affordable neighborhoods. It requires a re-examination of suburban communities in repositioning and transforming areas that could be at risk for blight. A number of projects have been completed or are underway to help reconnect communities, prevent blight, and restore green space.

10. Bifurcation of capital markets

Debt capital markets have been volatile since the pandemic, namely public markets like commercial mortgage-backed securities, mortgage REITs, and agencies such as Freddie Mac and Fannie Mae. “Mortgage REITs took a significant hit early in the pandemic, with some recent recovery driven by restructuring credit lines and paying down credit facilities that experienced margin calls,” the report notes. Still, the “market continues to be flush with debt capital liquidity, despite property type and market uncertainty. Looking out to the remainder of 2021 and into 2022, performance will dictate the amount of distress and losses, and risk management should dictate markets, property types, leverage, loan structure, and pricing for mortgage debt. The next year should also tell us if commercial real estate debt was too rich and whether perceived risk underestimated where pricing should have been.”

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

2941 Edgewater Dr, Eugene, OR 

Price: $1,150,000    Beds: 3    Baths: 4.0    Sq Ft: 3397

Don't miss this elegant 1-level executive home in a quiet cul-de-sac. Large covered patio w/ infrared ceiling heat & a gas fire table overlook a pond & waterfall making it a relaxing & private retreat. Spacious indoor/outdoor entertaining w/ Sonos s...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The shortage of available housing continues both nationally and locally.  The escalation in home prices caused by extreme demand, high cost of lumber and building supplies and the shortage of skilled labor have all lead to a huge problem for those wanting to purchase homes.  Right now the shortage of affordable housing is extreme and the situation is not improving.  In the Eugene and Springfileld area, high housing costs, the lack of affordable building sites and the high cost of material and labor are creating a situation where home buyers are forced into the market of existing homes. This has been the perfect storm for creating a housing shortage.  The following is an article from "Realtor.com" that talks about this problem nation wide.

The numbers: Construction on new homes rose slightly in May, but high lumber prices and labor shortages have stymied builders and could leave many customers frustrated as the busy U.S. summer home-buying season gets underway.

Builders started construction on new homes at a 1.57 million annual pace in May, the U.S. Census Bureau said Wednesday.

In other words, that’s how many houses would be started in a year if construction companies did the same amount of work every month as they did in May.

The increase was somewhat of mirage, however. April’s originally reported increase of 1.57 million was trimmed to 1.52 million.

Permits to build new homes, meanwhile, fell 3% last month in another sign of the trouble builders are running into. They slipped to an annual rate of 1.68 million from a revised 1.73 million in April.

Big picture: Demand for new homes is sky high with the economy recovering from the pandemic and mortgage interest rates still near rock bottom. Housing starts and permits recently hit a 15-year peak.

The problem is, construction companies simply can’t build new homes fast enough or keep the prices within most the range of most buyers.

High costs of raw materials, a shortage of skilled workers, and a limited number of vacant lots all pose barriers to new construction.

The result: Home shoppers should expect a limited selection of properties of sale and higher home prices, potentially limiting the number of buyers.

Applications for new mortgages, for example, have declined recently in a sign that higher prices are scaring away buyers.

What’s compounded the problem is a paucity of existing homes for sale. Listings have tumbled 13% since they touched a 14-year high last October.

The housing market has been a big contributor to the U.S. economic recovery. It’s likely to continue to play a big role, just not as big as it has in the past year.

Key details: New construction on single-family houses increased by a solid 4.2% to 1.1 million rate in May, but permits declined again. Permits have fallen almost 11% from a 15-year high in January.

About two-thirds of new units built are single-family homes.

Builders also started work on more multi-family projects with at least five units: Condos, townhouses, apartment buildings and the like. They increased 4% to an annual rate of 465,000.

Permits on multi-family units also fell, however.

Construction increased sharply in the Midwest and grew more slowly in the South and West. Only the Northeast saw a decline.

Home building is much higher in all four regions compared to one year ago, but construction is likely to take place at a more subdued pace until all the bottlenecks ease.

There is some good news. Lumber prices have tumbled 40% from a record peak in May, for example. Yet some of the barriers to construction, such as a shortage of skilled labor, have existed for years and are likely to be a chronic problem.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

1122 Alderdale Dr, Junction City, OR 

Price: $450,000    Beds: 3    Baths: 2.0    Sq Ft: 1729

Beautiful open concept home with spacious living area, kitchen and large bedrooms with additional den that could be a 4th bedroom. Large private lot with huge RV parking area and room to build small shop or outdoor living structure. There is lots of...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The Real Estate market in the Eugene and Springfield area remains robust.  The number of homes going on the market for sale has continued to increase, but sales activity is so active that the inventory level remains extremely low.  As with most of the country home values remain in an inflationary state and continue to increase with demand.  Mortgage rates for the most part remain stable and low. Change is on the horizon as inflation expands with most consumer goods at high levels.  An overall decline in our national economy is on the horizon unless inflation can be kept in control.  Here are the statistics for home sales in Lane County for May of 2021.

New listings (608) increased 25.4% from the 485 listed in May 2020, and increased 16.3% from the 523 listed in April 2021.

Pending sales (554) increased 19.1% from the 465 offers accepted in May 2020, and increased 21.2% from the 457 offers accepted in April 2021.

Closed sales (394) increased 26.7% from the 311 closings in May 2020, and increased 6.5% from the 370 closings in April 2021.

Inventory and Market Time

Inventory held steady at 0.7 months in May. Total market time decreased to 15 days.

Year-To-Date Summary

Comparing the first five months of 2021 to the same period in 2020, new listings (2,345) increased 2.4%, pending sales (2,096) increased 13.8%, and closed sales (1,758) increased 14.2%.

Average and Median Sale Prices

Comparing 2021 to 2020 through May, the average sale price has increased 18.6% from $340,700 to $404,100. In the same comparison, the median sale price has increased 17.2% from $320,000 to $375,000.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

3620 Berkshire St, Eugene, OR 

Price: $449,000    Beds: 3    Baths: 2.0    Sq Ft: 1455

Beautifully maintained home in desirable Ferry Street area. High ceilings and vaulted areas make home feel open and spacious. Backyard has gazebo with fire pit and wonderful landscaping with private feel to it. Sideyard could potentially be area for...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

A shortage of homes for sale plagues the nation and has created a hot market for home sellers.  Adding to this is the continuation of extremely low and favorable mortgage interest rates.  Rates at this time are well below that of last year at the same time and it looks like we should continue to enjoy the low rates for some time with some moderate increases.  Here is an update on recent mortgage rates.

Mortgage rates were on the rise last week but remained just below 3%, offering borrowers another opportunity to lock in historically low rates.

Still, the National Association of REALTORS® cautions that borrowers should expect mortgage rates to increase modestly in the following months as the economy continues to recover. NAR forecasts the 30-year fixed-rate mortgage to average 3.20% in 2021.

“Home prices continue to accelerate while inventory remains low and new home construction cannot happen fast enough,” says Sam Khater, Freddie Mac’s chief economist. “There are many potential home buyers who would like to take advantage of low mortgage rates, but competition is strong. For homeowners, however, continued low rates make refinancing an option worth considering.”

Freddie Mac reports the following national averages with rates for the week ending June 3:

• 30-year fixed-rate mortgages: averaged 2.99%, with an average 0.6 point, up from last week’s 2.95% average. Last year at this time, 30-year rates averaged 3.18%.


• 15-year fixed-rate mortgages: averaged 2.27%, with an average 0.6 point, unchanged from last week. A year ago, 15-year rates averaged 2.62%.


• 5-year hybrid adjustable-rate mortgages: averaged 2.64%, with an average 0.2 point, up from last week’s 2.59% average. A year ago, 5-year ARMs averaged 3.10%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

3620 Berkshire St, Eugene, OR 

Price: $449,000    Beds: 3    Baths: 2.0    Sq Ft: 1455

Beautifully maintained home in desirable Ferry Street area. High ceilings and vaulted areas make home feel open and spacious. Backyard has gazebo with fire pit and wonderful landscaping with private feel to it. Sideyard could potentially be area for...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!