Friday Update June 18, 2021
545 existing single family homes on the market today! That's a pretty sizeable ramp up over the last couple of weeks and in certain price points with certain homes you can see a little bit of a slowdown. Before you guys crucify me for this comment the sub 450k price range is absolutely brutal with multiple offers on just about every property. But as we get above 500k into poorly marketed, poorly priced houses, those tend to sit a little while longer than they did say 3 months ago. Still a brutal seller's market but getting just slightly less ridiculous, by a hair.
For perspective we have had over 850 sales closed in the month of June already and the inventory we do have represents about a 10 day supply. That is stupid crazy low. Our median sold price for June so far is at $450,000 and our median sold to list price ratio is 104%. People are steady paying above asking price, that has not changed at all.
Rates got a little bit volatile this week with the Fed making the announcement that they do see the inflation that's been obvious and that they will likely raise the Fed rate by 2023. Keep in mind it's not uncommon for the Fed to say stuff and then do the opposite. We we're supposed to have like 3 rate increases in 2019 and more in 2020 and you saw what happened. So yea, they say stuff, market reacts and overreacts but overall rates ended the week basically flat, slightly lower.
One thing I'm super stoked about is the crash in lumber futures. We hit a peak May 7 of $1700/thousand board feet and today are trading at $878. That is fantastic news for me personally as we get ready to order the lumber pack for our house in about 6 weeks and it's good news for builders across the board. (pun intended) If you go to Home Depot right now I think 2 by 4s are still around 7 bucks but you should see that drop over the next several weeks as delivered price starts to mirror the futures action.
That being said do not expect home builders to suddenly drop pricing. First of all lumber is just one component of a new build and accounts for no more than 25% of the build cost. Guys feel free to correct me here if I'm wrong. We now have shortages of literally everything especially labor. So just because one component of a build drops in price does not take the pressure off elsewhere. If I had to bet on this I'd say that builders will most likely get a little bit more agressive with how many homes they are willing to start, and maybe reduce their waiting lists a bit, rather than lower prices. Right now our local builders have waiting lists that are anywhere from a few weeks to a few months before they allow buyers to even sign a contract. The disparity between the amount of demand and the short supply is pretty staggering.
Things that normally take a few days to a couple weeks are now taking several months to deliver. Trusses are taking 8-10 weeks because there is a shortage of high strength steel plates that hold them together. Windows are 10-12 weeks out for delivery because of the disruption of all the supply chains there. Cabinetry, trim, doors, certain types of paint are all in short supply. If you can get trades to show up to work then you're winning. Speaking with several of our local builders in the last few weeks many are just treading water right now, just selling enough to keep the doors open and just hoping to make it through this bullshit Covid induced supply snafu. Other builders are doing worse than that and some peoples' true colors aren't shining all that brightly.
In summary guys if you want to sell a house let me do it for you quickfast for a bunch of money. A bunch of money for you that is, a little for me. If you want to buy a house quit trying to convince yourself that you're smarter than the market. You're not gonna time anything just right so just buy when you're able to and it makes sense for you. One guarantee I can make is that 100% of your rent is going into someone else's pocket, and if they're like me then they appreciate it!
A little side note with some extra shade for the agents that are running their mouths on social media about a looming market crash. If you truly think the market is about to crash then go ahead and stop working with buyers and writing over list price offers with appraisal gaps. If you truly think the market is about to crash then just go ahead and take a vacation so that you won't intentionally put people under water just so you can get a paycheck to pay on your beemer lease. If you really truly feel like the market is about to crash then do us all a favor and stop trying to snipe houses to flip. When your actions and your words don't align that makes me think that maybe, just maybe, you're fucking people over.
This year I intend to build a house and buy 3 others. If the market crashes next year then so be it as I'm buying these homes for the long haul. When you take out a 30 year mortgage but have a 1 year outlook on the market you're gambling. When you buy property that cash flows through thick and thin you're investing. Don't let manipulative transaction oriented people affect your outlook on the long term just so they can make a quick buck off you.
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