Here’s what’s happening in the real estate market in August 2021.
1. Federal protections are expiring
The day many investors and landlords have longed for is finally here: As of August 1, the CDC’s ban on evictions expires, and landlords will soon be able to start evicting nonpaying tenants. To be clear, there are still rental assistance programs and state and city measures that can help tenants who are behind, but for those unable to leverage these programs (or in a place with no protections), eviction may be the only course of action for a landlord.
The national foreclosure moratorium also expires at the close of July, so mortgage servicers will be able to start filing notices fairly soon. Still, they’ll have some new CFPB-enforced hoops to jump through (like attempting loss mitigation with the homeowner). When you throw in the pretty hefty timelines on foreclosures in some states (over 3,000 days in Hawaii!), it could be a while before investors see more distressed properties hit the market.
2. Inventory is inching up
Listings are finally starting to climb, albeit slowly. According to Realtor.com, new listings were up 9% in the week ending July 24, for the second week in a row, and the market has seen year-over-year inclines in 15 of the last 18 weeks.
Another good sign? The gap between today’s total inventory and last year’s is shrinking. Current inventory is now down just 31% compared to a year prior. At the start of July, it was 35%.
3. Demand is decreasing — and competition is slowing down
There are definitely signs that buyers are getting burned out. For one, sales are dropping. Pending sales dipped 11% from their 2021 peak, according to Redfin, and the speed at which homes are selling slowed too. The typical property now sells just 19 days faster than this time last year, according to Realtor.com. In the first week of July, it was 23 days.
Finally, mortgage applications — at least for purchase loans — have decreased as well. According to the Mortgage Bankers Association (MBA), applications to buy a home were down 18% over the year last week and have declined for three months straight. Purchase applications are now at their lowest point since May 2020.
4. Rates are still super low
Mortgage rates dipped below 3% back in April and have largely stayed there ever since. Last week, the average rate on a 30-year mortgage came in at a mere 2.8%, while 15-year loans saw an average 2.1% — a record low for these loans.
As First American reported, the low rates are making housing slightly more affordable (homebuying power increased 8% in May), but sky-high price growth has held progress back in this department.
5. Investors are busy
Investors have apparently taken note of the market’s improving conditions and are acting fast. According to Redfin, investors bought a whopping $49 billion in homes during the second quarter of the year. By volume, investor purchases were up 15.1% over Q1 and 106.7% from Q2 2020 (when the pandemic began making an impact).
iBuyers are also getting back in the game. Purchases from iBuying companies were up 20% over the last quarter of 2020.
6. Home price drops are becoming more common
Overall home prices are still on the rise (up 18% over the year, in fact), but price drops — or the number of sellers reducing their list price while already on the market — have increased.
Redfin’s data shows that 4.1% of listings had price drops in the week ending July 11, inching the market back toward 2019 levels. Sale-to-list price ratios are also plateauing, hopefully indicating a slowdown in bidding wars and ever-escalating offers.
7. Rents are skyrocketing
For those investors with rental properties, things have really turned around. Reports last week showed rents clocking in at their highest point in almost two years. What’s more, in 44 of the biggest 55 markets, rents are the most expensive on record. Apartments rents, specifically, are also up.
The bottom line
Real estate trends are always changing. Want to stay on top of these latest trends and happenings? Check back here every month for updates.