Special Edition

Guest Writer:

CEO and Founder of Signature Homes

Dwight Sandlin

Hello, I am Dwight Sandlin, with Signature Homes. I have been asked by many of you my thoughts about the real estate market, so I thought I would take a few minutes to share my thoughts and real facts about today’s market.

OVERVIEW

First, it is a great time to buy a home, and no we are not going into a 2008 housing crisis… That is what the media would like you to believe. Remember, the media loves bad news.

Here are a few facts from the National Association of Realtors just days ago:

• The average number of days homes are on the market has declined in the last 3 months. (29 Days in March, 22 Days in April, 18 Days in May) Pre-covid numbers were 60-90 days. This shows a solid demand on homes as well as a shortage.
• The number of sales has grown over the last month. The national inventory of homes in the market is about 50% of norm.
• FHFA (Federal Housing Finance Agency) shows home prices up 7% in 2023.
• New home starts are up because of the demand. Home builders throughout the country are having robust sales and they recognize the lack of inventory.
• The sales of new homes increased 12% in April and 20% year over year.

Despite all of the scare tactics from the media, comparing 2008 to today is nonsense.

HERE ARE THE FACTS!

• From 2001-2006, home starts and sales were based on unqualified purchasers as well as unqualified investors getting loans, with no thought of how they were going to pay back these mortgages. They were convinced that prices would continue to rise, and flipping homes was the new way to make money fast. Everyone was riding the wave of making easy money in real estate. At this time, our country had about 2.5 million new homes more than needed. OVER 2.5 MILLION!

The movie The Big Short tells the story.

• In 2008 the financial crisis was fueled by an unprecedented drop in home prices and foreclosures. 
• In 2009 housing starts dropped from an average of 2 million from 2001-2006 to 500,000 (75% decline). It took 5 years to absorb the oversupply and created the worst housing market since the Great Depression.

WHERE WE ARE TODAY, AND WHY I KNOW THE PRESENT IS THE BEST TIME TO INVEST IN A HOME.

• In 2020, when covid hit, the federal government pumped trillions of dollars into the economy. At that point, the Federal Reserve lowered rates that resulted in 3% mortgage rates (an all-time low). By the way, many buyers are waiting for the rates to be at 3% again. DON’T. That will not happen again unless we have a deep recession.
• The millennials (80 million strong) have entered the home buying market, raising the demand.
• In 2022, due to high inflation, the Fed raised rates resulting in a 7% mortgage rate, which caused sales to stop abruptly for 6 months.
• In 2023, new home sales gained traction. Home buyers quickly realized that although rates were higher, there simply was not enough supply to meet demand. If rates drop, demand will rise, as will prices. They started to buy even though rates were 7%.
• Freddie Mac, a government agency that buys home mortgages, reports today that we have a shortage of 3.8 million homes. Nationally, home builders are currently building about 1.5 million homes per year.

RECAP

• 2008: 2.5 million too many homes
• 2023: 3.8 million homes short

WHAT DO WE DO NOW

Based on lack of inventory, with no solution in sight- Now is the time to buy.

If rates decline, the demand will only be greater. If rates come down, many homebuyers are planning simply to refinance, while benefiting from today’s pricing. Based on home values rising this year, it is highly unlikely home prices will fall.

So the message I would like to leave with you is, do not buy into the media’s scare tactics. 

Owning a home is the best financial investment you can make. As well as the best decision you can make for your family.

-Hope this message was helpful.