Industry Partnerships Point to Success
Builders who left the market after the housing crisis in 2008 are witnessing a positive turnaround enabling them to regain traction in today’s market. New builders entering the market for the first time are seeing encouraging results as well. The rate at which builders are entering or re-entering the market has slowly begun to increase, indicating many of them are no longer gun-shy from the economic downturn. However, we are still in a recovery phase and housing shortages are concerning for buyers across the nation. With limited inventory, plus the hiked purchase prices in this seller dominated market, would-be home buyers have found themselves in an unfortunate position. Add to this the increase in interest rates and the cycle is encouraging more potential buyers to shy away from purchasing. These hurdles support a positive environment for investors to continue to buy properties, placing more emphasis on the need for additional inventory. Without a shift in investment opportunities offering more lucrative possibilities for investors, the housing industry will continue to experience shortages due to the vast number of single-family homes held for rentals.
Diversified builders who are remodeling and building new homes have seen the steadiest increases in business. Partially because of the investors taking advantage of neglected uninhabitable homes which need repair work. Financial experts with Fannie Mae have echoed these findings and report that for the first time in recent history, remodeling and new home construction are trending at the same pace.
Overall, new home sales are up and many areas of the country are reporting an increase in the number of permits being granted. According to Inside Lending Snapshot, new home sales are seeing a 5.7% overall increase while existing home sales have slowed by 1.7%. This shift in buying trends is supporting the demand for new home construction. Coming in on the heels of a strong summer buying season we are approaching the time of year when the market traditionally supports the purchase of starter homes. October to December tends to show positive inventory increases which in turn forces the lowering of listing prices with decreases averaging between 3.1% and 4.8%. The lower prices help improve the likelihood of new buyers being able to justify the impact of a slightly higher interest rate. This is good news for builders, lenders, and realtors, all of which who want to know “How do we meet the need?”
Ultimately, the opportunities are there for builders but there are some significant concerns in the immediate path. Builders are reporting difficulty finding available land. They are also continuing to report experiencing a difficulty with finding qualified trade workers. Lenders are trying to place a higher emphasis on educating the public regarding available programs to them for purchasing. Realtors on the local levels are working to keeps pricing accurate. Many sellers are realizing they have the upper hand and are pushing the prices up. This can be counterintuitive when they sell a home and are battling the same increased pricing concerns as they prepare to move.
A significant step that we as industry leaders can take is to focus on partnering with one another. Meeting with lenders and realtors, participating in local HBA events along with building upon our networking relationships can aid in bridging the gap. Don’t have time for more meetings? Online sources such as LinkedIn or other social media outlets are easy ways to reach others in our local home buying industry and trades. The adage ‘you scratch my back, I scratch yours’ could not be more applicable or appropriate to help all of us meet the demands of the public. We are all excellent sources of knowledge individually but as a collective unit, we can help each other prosper. The highest form of flattery is a referral. Do you know anyone we can help? Do you need a reference to a lender or wish to meet a realtor to help you be more competitive? Your local RWC Account Executive is a wonderful resource! Let’s chat!