Q: How long will this shortage of homes last and is Orlando housing headed for a crash, or is it continuing to climb?
A: Here are five factors that clue us in to where the Orlando market is likely headed:
1. MORTGAGE RATES
Low interest rates could continue to fuel demand from homebuyers. Some experts believe mortgage rates will creep up later this year, but expect rates to remain at near historic lows. However, the Federal Reserve signaled in mid-June it might institute two interest rate hikes as soon as 2023, which could trigger an uptick in mortgage rates.
2. HOME PRICES
In June, the national median list price for a home reached an all-time high of $385,000, up 12.7% on a year-over-year basis. And according to the Home Buying Institute, various reports and forecasts indicate home prices will keep climbing throughout 2021 and into 2022.
3. SINGLE-FAMILY HOMES
Single-family home sales are down from their peak in October 2020, yet are still above the overall level last year. In May 2021, 5.8 million existing single-family homes were sold in the U.S. That’s a 45% increase over the 4 million homes sold in May 2020.
However, the National Association of Realtors said that home sales saw a 0.9% dip in May 2021 compared with the previous month. That was the fourth straight month for a decline in home sales. The number of home sales has slid recently because of rising prices coupled with a shortage of available homes amid intense demand.
4. HOME INVENTORY
According to the National Association of Realtors, in May there were 1.23 million previously owned homes on the market, down 20.6% from the same time last year. This translates to a 2-and-a-half month supply of homes. In other words, if no one from today forward puts their home up for sale, we would run out of houses to buy in 2-and-a-half months. This is well below the 6 months of inventory typically seen in a balanced market.
5. SINGLE-FAMILY CONSTRUCTION
Economists forecast that 1.1 million new houses will be started in 2021, and 1.2 million new starts predicted for 2022 and 2023. However, builders are coping with shortages of materials and labor, and are struggling to increase production and meet demand. The recent lumber shortage alone added an average of $35,000 to the price of a new home.
Given where the Orlando real estate market is trending, don’t hold off on making a real estate decision. Whether you’re thinking of buying, selling or staying put, with the right advice, this current market can benefit you. Contact Jackson Florida Realtors or Jackson Law, PA and let our team of realtors, and our escrow, title and closing legal team, represent and protect your interests through your real estate decisions.