Real Estate Market Statistics

Soaring Lumber Prices Add $36K to Average New-Home Price

Buyers who purchase newly constructed homes are paying more not only because of intense competition in the market but also surging lumber prices. Record-breaking growth for the cost of lumber is pressing on builders’ budgets and prompting them to pass along price increases to buyers.

 

lumber yard

© juniart - AdobeStock

The increase in lumber prices over the past year has added $35,872 to the price of an average new single-family home and $12,966 to the price of an average new multifamily home. The latter translates to an extra $119 per month in rent for apartment dwellers, according to new housing data from the National Association of Home Builders.

Some builders report slowing production due to the rising building costs. Still, single-family housing starts jumped 41% in March compared to a year earlier, according to U.S. Census Bureau data. More than a quarter of single-family homes that were on the market in the first quarter of this year were new construction—the highest share on record, according to Redfin research.

But lumber prices—up a whopping 340% compared to a year ago, according to Random Lengths, a wood products industry tracking firm—threaten that market share. For a new home, lumber is often used for framing as well as for cabinets, doors, windows, flooring, and decks.

Builders are facing rising costs for other building materials, too. For example, year-over-year prices are up nearly 7% for drywall, 27% for copper—the price of which set a record high this month—and 11% for land prices. Prices for single lots especially have jumped this year due to high buyer demand and low supply.

“There’s a literal land grab going on as builders are scooping up lots to better match housing supply with demand,” Ali Wolf, chief economist at Zonda, told CNBC. “The lot supply shortage is real, and it is causing prices to rise and builders to move further into the suburbs.”

 

Realtor Magazine, Source: 

Soaring Lumber Prices Add $36,000 to the Cost of a New Home, and a Fierce Land Grab Is Only Making It Worse,” CNBC (April 30, 2021) and “Higher Lumber Costs Add More Than $35K to New Home Prices, $119 to Monthly Rent,” National Association of Home Builders’ Eye on Housing blog (April 28, 2021)

Is the new Workweek 3 Days In, 2 Days Out?

Many workers want to continue to work from home, even when the pandemic is over. A new survey from JLL of 2,000 employees globally found that 72% want to be able to work from home more during the workweek, up considerably from 34% before the pandemic. Sixty-six percent are in favor of a hybrid model that mixes in office, home, and a co-working facility.

office space and cubicles

The idea of a 3-2-2 model is gaining popularity with workers. LinkedIn’s year-end roundup of 2020’s workplace trends called it a one to watch in the new year. The model would allow employees to work three days in the office, two days remotely, and two days off.

While many workers don’t want to return full-time to the office, they are missing the workplace. Fifty-two percent of professionals say they do not feel as productive at home, and 58% miss working at an office, according to a separate JLL survey. The 3-2-2 model could allow workers to balance remote and in-office work.

“The emergence of this new framework for the workweek confirms that people don’t just want to go back to the office—for many, they need to,” writes Kenny Kane, chief operating officer at Firmspace, for Forbes.com. “And commercial real estate agents will see this reflected in their quarterly reports as soon as the pandemic turns around.”

Still, a CBRE analysis cautions that the growth in remote work could cut the overall need for office space by 15% after the pandemic ends. As workplaces consider new leases, they’re demanding more flexible space options, shared meeting spaces, better indoor air quality, connected building apps, and touchless technology, CBRE notes. Also, about 50% of the workers surveyed by JLL consider socialization spaces crucial to their experiences in the office in the future. These spaces could include coffee and tea areas, lounges, terraces that offer more connection with nature, and more.

Peter Miscovich, managing director of strategy and innovation at JLL, told the Commercial Observer that some clients are wanting to decrease their office portfolios, open up satellite spaces in the suburbs, or retool their existing spaces to fit a new hybid workplace model.

Co-working spaces are increasingly being viewed as an alluring option to more workers. The JLL survey finds that 40% of workers would like to be able to work at a co-working space in the future.

Regardless, the office will remain a key role for companies as a collaboration space, Miscovich says. Only 10% of survey respondents said they would want to work from home exclusively. Seventy-four percent said they would be willing to return to the office at least part time; 24% would be willing to return on a full-time basis.

 

Courtesy Realtor Magazine

Source: "72% of Workers Don't Want to Return to Office Full Time. Report Finds," Commercial Observer (March 5, 2021); "Shaping Human Experience," JLL (Feb 22, 2021); and "What the New 3-2-2 Work Week Will Mean for Commercial Real Estate," Forbes.com (March 2, 2021)

Co-Working Spaces May Soon See a Surge in Activity

Co-working and flexible workspace providers saw business quickly dwindle as the COVID-19 pandemic struck last spring and the shift to remote work began. These businesses sublet space on short-term contracts, which allowed tenants to leave quickly as employees moved to working from home.

Co-Working Spaces and flexible work week

However, investors and analysts are turning bullish that co-working and flexible office providers such as WeWork and IWG could soon see a boom in business as workers return to offices.

Still, there’s a lot of catching up to do. WeWork’s occupancy rate globally plunged to 47% at the end of 2020. It lost $3.2 billion last year, The Wall Street Journal reports. Before the pandemic, co-working spaces were the fastest-growing type of office space in commercial real estate, according to JLL. But the pandemic struck the sector particularly hard.

On the other hand, traditional property service providers have been more protected in the pandemic since their tenants sign long-term leases. Even as offices have remained mostly empty, building owners could still collect rent.

But moving forward, property providers may be more drawn to shorter-term leases. As such, investors are seeing signs that co-working spaces could hold a special attraction to offices moving forward.

Flexible leases could grow from less than 5% of the market today to as much as 30% by 2030, the real estate firm JLL forecasts.

Co-working spaces could grow as an option as companies may be reluctant to sign a 10-year lease until they better understand what the future of work will look like and how employees will divide their time between home and office. “Some may turn to looser office arrangements longer term, accelerating a trend already building before the pandemic,” says reporter Carol Ryan for The Wall Street Journal.

Companies that press forward with a remote office likely will still find they need a space to meet in-person at times. Also, some offices may decide on a hybrid workweek approach—splitting time between the office and home—which could also cause companies to look at flexible office space as an option.

“Co-working spaces have the potential to provide vital business services to support the remote workforce closer to where they are, especially as residual anxieties linger over taking public transit,” Brent Capron, design director of interiors at architecture firm Perkins and Will’s New York studio, told CNBC in an article on co-working spaces.

 

Courtesy Realtor Magazine

Source: "Flexible Offices Will Be Crowded After COVID-19," The Wall Street Journal (March 23, 2021) and "How Co-Working Spaces Could Succeed in the Post-Pandemic World," CNBC (Jan 12, 2021)

Luck, Superstition May Influence Real Estate Decisions

Many Americans admit to being superstitious when it comes to choosing what home to buy—in fact, they say if a home feels unlucky, they aren’t buying it. More than a third—or 38%—of Americans have decided against buying a home because of superstition, according to a newly released survey from LendingTree of about 1,500 Americans. And consumers who find their self-described lucky house are willing to pay even more for it.

4 leaf clover, influence real estate decisions

 

Reasons some consumers reconsidered a home purchase due to luck or superstition

                                                                                                                                                               

Source: LendingTree survey of 1,550 consumers conducted Feb. 19-22, 2021. Only those who chose not to buy a certain home due to luck or superstition answered this question. 

Homes a buyer perceives as lucky can nab more at resale. Nearly 47% of survey respondents say they would blow their budget for a lucky house—and are willing to go an average of $38,000 above their range for the home, the LendingTree survey shows. What qualifies as a lucky home? More than a third of buyers say they’d pay extra for a home whose street number was their lucky number.

The younger generations appear to be the most superstitious in real estate—55% of Gen Z and 50% of millennials said they’ve bypassed a home because of something related to luck or superstition. Overall, men are more likely than women to decide against buying a particular home because of superstition, at 51% of men and 37% of women.

Here are some additional findings from the LendingTree survey:

  • 39% of homeowners refuse to live next to a cemetery.

  • 32% would not buy a home with an unlucky street number. (On the other hand, the majority of respondents did say they’d buy a house with an unlucky street number like 13 or 666, but 20% would prefer to pay less because of it.)

  • 30% say they would not buy a home where the previous owners experienced a tragedy inside the home, like death.

  • 43% say they have at least one deal breaker related to the home’s feng shui, with the most cited reasons being a staircase that faces the front door, back and front doors in the same path, or a bathroom door that faces the front door.

  • 43% of survey respondents who reported being previous home sellers said they’ve had difficulties selling their home due to superstitious buyers.

 

Source: "Nearly Half of Americans Would Burst Their Budget for a "Lucky" Home," LendingTree (March 16, 2021)

The Top Green Features Buyers Seek in New Homes

Energy efficiency is on many buyers’ minds when they shop for new-home construction, according to a consumer survey from the National Association of Home Buyers. The NAHB surveyed more than 3,000 home buyers—both recent and prospective—on the features they most desire in their new home.

Many buyers said they’d go with the more sustainable option, such as the use of more durable materials in their home, when presented the option.

When the cost savings of these features are pointed out, they may be even more tempted—and they say they are willing to pay up front to help lower their utility bills. On average, buyers would pay up to $9,292 more for a home in order to save $1,000 annually on utility costs, according to the NAHB’s study.

“We’re doing a lot more in our homes now,” Brandon Bryant, founder of Red Tree Builders, a green home building company in Asheville, N.C., said during February’s virtual 2021 International Builders’ Show. But he added education is key. “We’ve got to teach people how to live in green homes, how these homes operate, and even before we build to let them know what we could do because a lot of times we could do so much more for their life.”

The top eco-friendly components and designs consumers said they desired:

  • Energy Star–rated windows and appliances

  • Efficient lighting that uses less energy than traditional bulbs

  • Energy Star rating for the whole house

Other trending features center around health and wellness, such as zone heating, purified air appliances (like UVC fans), indoor air quality sensors, and connections to the outdoors, the NAHB said.

"There are a wide range of green features that buyers feel are desirable," said Paul Emrath, vice president of surveys and housing policy research at the NAHB. "Energy efficiency, though, tops the list of what they most want."

 

Source: National Association of Home Builders

The Brighter Path Ahead

More inventory and better access to vaccines are welcome news.

family in front of home for sale

Courtesy of Lawrence Yun

The 2020 pandemic-induced recession was unique in terms of the sudden and massive slashing of jobs. It was also the first recession during which overall income grew. No doubt there are families struggling paycheck to paycheck, but due to the massive stimulus packages—including the initial deposit of $1,200 and enhanced unemployment benefits—the financial condition of many families was better in a recession than before the pandemic.

Total income for the country in late 2020 was 4% higher than a year earlier. This was the figure reported just before the second stimulus checks of $600 per person went out in late December. It also does not include wealth accumulation from the record-high stock market or rising home prices. Also not reflected in the totals are the proceeds from mortgage refinances last year or the relief expected from a new stimulus. Still consumers remain cautious, as spending opportunities have been restricted by COVID-19. For the year, consumer spending fell by 2%. And the savings rate consequently rose to twice the pre-pandemic levels.

The situation translates into the potential for a great unleashing of spending in 2021. The positive impact will be increasingly felt as jobs come around. The full effect will be evident once herd immunity is established with the vaccine, likely in autumn. That is to say, 2021 is a growth year that will take us out of the recession.

The housing market continues to shine brightly. The main frustration is for buyers who find themselves outbid during multiple offer situations. More inventory is needed to give buyers more options and lessen the heat.

It's encouraging to see that builders are ramping up production of homes with backyards, which are now at their highest level in 13 years. Activity has been particularly robust in Southern states where land is more plentiful and building regulations are less onerous.

Moreover, with the wider availability of COVID-19 vaccines, homeowners, especially older Americans, who have been more hesitant about strangers visiting their homes, now may be more ready to list. Many seniors own their homes outright and have sizable housing equity for their next home purchase. They may even need to buy a larger place to accommodate more family visitors. After all, in the new economy, remote-work flexibility may mean more days working from grandma’s house.

 

Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of REALTORS®


Mortgage Rates Rise But Stay Near Historic Lows

The 30-year fixed-rate mortgage came off its recent all-time lows to average near 3% last week. The 10-year Treasury yield, which mortgage rates closely follow, hit its highest level in the past year, prompting the increase in rates.

calculator, home and keys mortgage rates

“As the economic recovery progresses, mortgage rates are expected to rise further in the upcoming months,” writes Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, for the association’s Economists’ Outlook blog. “Nevertheless, the upcoming rise in mortgage rates should not be alarming to would-be home buyers. The Federal Reserve recently assured that it would keep interest rates unchanged for a long time.”

Rates continue to remain near historic lows, said Sam Khater, Freddie Mac’s chief economist. The all-time low for the 30-year fixed-rate mortgage was set in January, averaging 2.65%.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 25:

  • 30-year fixed-rate mortgages: averaged 2.97%, with an average 0.6 point, up from last week’s 2.81% average. Last year at this time, 30-year rates averaged 3.45%.

  • 15-year fixed-rate mortgages: averaged 2.34%, with an average 0.6 point, rising from last week’s 2.21% average. A year ago, 15-year rates averaged 2.95%.

  • 5-year hybrid adjustable-rate mortgages: averaged 2.99%, with an average 0.1 point, rising from last week’s 2.77% average. A year ago, 5-year ARMs averaged 3.20%.

Freddie Mac reports average points along with average commitment rates to better reflect the total upfront cost of obtaining the mortgage.

Source: Freddie Mac and "Instant Reaction: Mortgage Rates, February 25, 2021," National Association of REALTORS® Economists’ Outlook blog (Feb. 25, 2021)

 

How the Pandemic Is Affecting Where Buyers Move

In these turbulent times, one thing is for sure: The COVID-19 pandemic has drastically changed the real estate market. Low inventory and high demand continue to drive up home prices as buyers explore new markets and consider new places to call home that previously may have been off the table.

By Kaycee Miller: Kaycee manages marketing and media relations for Rentec Direct and shares industry news, products, and trends within the community.

Trends have emerged in terms of popular destinations as a result of changes brought on by the pandemic. Here are a few factors that are expected to continue influencing buyers in 2021.

Remote Work: The New Normal

While remote and virtual work was a growing trend prior to COVID-19, now, nearly a quarter of the U.S. population is currently working from home because of the pandemic. Many experts predict a substantial percentage of the workforce will continue to work remotely in some capacity even after life returns to normal, which means buyers are looking in locations that previously wouldn’t have been a viable option.

With buyers no longer tied to locations because of their jobs, they’re more often considering a move based on lifestyle and quality of life. And if the trend of remote work continues at its expected pace, more buyers will be willing to live further away from their jobs, foregoing downtown areas and public transportation options because they no longer have a daily commute. As a result, homes with a dedicated office space and other work-friendly features will grow in demand.

In San Francisco, some tech company are now allowing employees to work remote indefinitely. I know one buyer who’s now considering moving across the country to North Carolina. There’s not only a substantial difference in housing prices compared to the Bay Area, but he will also be able to keep his current salary. As you can imagine, this will have a massive impact on his family’s income and savings—and it’s something he never would have considered pre-pandemic.

High Costs Contributing to Migration

With people spending more time at home than ever before, many are weighing the pros and cons of price per square footage and opting for more space in a rural location as opposed to less space in a highly populated area.

A growing number of city-based buyers are also considering moving to the suburbs for the first time in pursuit of lower housing prices. And many people have been forced to move during the pandemic as a result of income or job loss.

The draw of popular downtown areas will not likely disappear completely. Job opportunities and proximity to restaurants, entertainment, and culture will continue to attract buyers. However, 2020 did result in more homeowners and renters moving to the suburbs, especially areas with a high number of COVID-19 cases.

Prioritizing the Great Outdoors

As Americans seek easy access to outdoor recreation options, there have been major increases in the number of people moving into states like Utah, Oregon, New Mexico, and Idaho this year, perhaps looking for more distance from others.

The changes this year have been so abrupt and drastic that we have no precedent for examining these trends. What we do know, however, is that the pandemic is ongoing and its complete impact on the real estate industry remains to be seen. The trends we are tracking may or may not be permanent, but it’s worth keeping a close eye on population movement, as these metrics will definitely influence what the marketplace will look like in 2021.

 

5G, Smart Masks: Emerging Tech for Real Estate in 2021

CES 2021—the tech industry’s annual mega-show—moved to an all-digital format this year due to the pandemic. About 1,800 exhibitors have been taking part in the virtual show, which Consumer Technology Association (CTA)® has hosted all week. Companies showcased products via virtual press conferences, Zoom rooms, and an all-digital expo floor experience.

By Melissa Dittmann Tracey, Contributing Editor for REALTOR® Magazine.

Technology companies are racing to respond to the coronavirus crisis with products intended to help you connect remotely. Robots, augmented reality, and new filtered air solutions for the home are among the tech developments the real estate industry is watching.

Here are a few trends to watch:

1. Greater emphasis on cleanliness.

Portable air filters, robotic vacuums, and ultraviolet light sanitation products are trending. Companies are adding touchless and voice-enabled tech, such as for smart locks and faucets, to prevent the spread of germs at home and in the workplace. Several companies are presenting air purification systems—some portable—to help filter out harmful germs in indoor environments.

Homebuilders are paying attention to buyers’ increased interest in healthier homes, too. For example, Taylor Morrison’s TM LiveWell model home highlights improved ventilation for indoor air quality, filtered drinking water, and nontoxic building materials containing fewer chemicals. More than a third of potential home buyers say they want a new home with better health and wellness features, Erik Heuser, chief corporate operations officer at Taylor Morrison, recently told BUILDER.

2. 5G connectivity serves as a backbone for innovation. More than 67 million 5G smartphones are expected to ship in 2021, according to CTA. As 5G service becomes more available across the country, tech firms believe the super-fast connection speeds—10 times faster than 4G—will pave the way for rapid innovation in smart-home tech, autonomous vehicles, artificial intelligence, and connected cities. “5G is so much more than just another tech innovation,” Hans Vestberg, CEO of Verizon, said Monday at a session during CES 2021. “It makes other innovations possible.” Vestberg added that there are about 14.2 billion connected technology products currently supported on 4G networks. The field is predicted to grow to 55 billion products by 2025, which will require the support of 5G networks, he said.

3. Interest grows for robotics and drones. As the pandemic made less physical contact necessary, companies increasingly turned to robotics and drones, said Lesley Rorhbaugh, director of research for CTA. She predicted accelerated adoption of more robotic technology across industries. “These solutions are becoming necessary to stay safe and protected,” she said. Retailers are turning to robots to stock store shelves. Hygiene robots like the Xenex LightStrike disinfect commercial spaces using UV light. Drones are increasing in demand for contactless deliveries, she noted.

In real estate, could robot-led home tours become more commonplace? In 2017, real estate startup Zenplace began offering such tours, enabling a remote real estate agent to speak to potential customers in a video chat while the robot shows the house, gliding from room to room. Since the pandemic, “we are seeing unprecedented demand for our platform across 35-plus states,” Jason Green, a spokesman for Zenplace, told CNBC in March.

4. As more information heads to the cloud, security concerns grow. Fifty-nine percent of global enterprises expect their cloud usage to increase due to the COVID-19 pandemic, according to Flexera’s 2020 State of the Cloud Report. But as more data moves to the cloud—including home sales—security remains a paramount concern. Eighty-three percent of companies cite security as their top concern as more processes move to the cloud, according to the report. Tech companies are rushing to develop greater encryption technology to better protect business data. In real estate, cybersecurity remains a top concern due to the growth of wire fraud scams, but you can step up your defense against hackers.

5. Smart-home tech adoption accelerates. Voice commands via Amazon Alexa and Google Home are simplifying the use of smart-home devices. And the call for cleaner homes is fostering an interest in smart-home products for air filtration. Kohler is debuting several motion sensors and touchless operations for kitchen and bathroom faucets to prevent the spread of germs. Also, greater artificial intelligence is being added into smart-home tech to recall user preferences and make suggestions. AI is being incorporated into everything from television sets for content suggestions to washer and dryers for recommend wash cycles. The largest growth in smart-home products centers on smart displays, doorbells, and appliances, CTA notes in its tech forecast.

6. Augmented reality overlays the real world. By 2030, tech firm IDTechEx predicts that the augmented, virtual, and mixed reality markets will surpass $30 billion. Koenig foresees rapid growth in augmented reality, which is the projection of digital information like graphics, text, and sound onto the real world. Beyond smart glasses, AR is increasingly being used in smartphone applications—an advantage over having to wear bulky VR headsets to immerse in 3D realities, Koenig notes. The real estate industry is dabbling in AR by offering up different views of staged homes or scenarios for remodeling. Buyers can use AR apps to better visualize a space according to their own design tastes. For example, Australian startup RealAR offers 3D configurations of properties using AR via a smartphone app. The technology could also help buyers better visualize properties when viewing them remotely.

7. Masks get smarter. A mask is becoming an essential part of your everyday wardrobe. Several companies are touting high-tech masks with added air filters for safety. Rorhbaugh says some smart masks may be able to track environmental conditions around you, such as alerting you on your smartphone when you’ve entered an area with high pollution. LG is launching the PuriCare Wearable Air Purifier, a battery-operated face mask that features two H13 HEPA filters with dual fans. It also comes with a case with UV-LED lights that can kill harmful germs and charge the mask between uses (price information yet to be released). Binatone’s MaskFone a medical grade N95 mask with built-in wireless headphones and a microphone. It includes voice control using Alexa.

Binatone’s MaskFone

 

How to Successfully Buy a Home in a Tight Seller's Market

If you’ve decided to buy a home this fall, good luck to you. Your challenge will be not just finding a home you like, but also beating out all the other homebuyers who like it and want to make an offer on it, too.

One key with multiple homebuyers

By Teresa Mears, Contributor, U.S. News & Report

The number of homes for sale is low, particularly in the price ranges desired by first-time homebuyers. 

That means if you want to end up with a nice home, you need to be strategic. Expecting to find the home of your dreams by nonchalantly walking into a few open houses or perusing some online listings is not realistic in this seller’s market.

Here are nine tips to help you get the house you want.

Get your finances in order first. Before you intend to start looking, you should get copies of your credit reports to make sure you’re in a financial position to buy. Shop for mortgage financing before you start looking at houses and get a preapproval letter or proof of funds to show the seller.

Move quickly once you find the house you want. That often means making a decision to purchase new homes within hours of them being listed and writing up an offer immediately if you like the house.

Don’t make snap judgments based on listing photos. A house that doesn’t look appealing in photos could still be a great house. Homes being sold by an estate or homes with tenants inside often yield particularly poor photos. Plus, photos fail to convey the feeling of a home or the floor plan. Unfortunately, sometimes pictures don’t tell the true story, you have to be willing to look past them.

Be realistic about the inspection and repairs. The more competitive the market, the less likely a seller will be to make repairs, though some sellers may lower the price if the inspection reveals expensive defects. The purpose of the inspection isn’t to get the seller to repair every small problem but to find out for sure that the house is what you thought it was. 

Start with your best offer. A competitive market is not the right environment to negotiate a bargain. You may get only one chance to make an offer, and your offer may be one of several the seller will choose from. You need to come in with your highest and best. Remember that the offer includes not only the price, but also your financing package and other terms such as the closing date and contingencies.

Write a personal letter to the sellers. Some sellers are interested only in how much money their home sale will yield, but others love their home want it to go to a new family that will love it just as much. If you really like a house, include a personal letter and a family photo with your offer.

Make a big earnest money deposit. The expected size of the earnest money deposit, and the rules about when you get it back, vary by locality. But sellers often see a larger deposit as a sign that you’re serious about the deal.

Make a backup offer. Many prospective buyers don’t want to make an offer on a house that has a pending contract. But deals fall apart over inspections, financing and other terms. If you found the perfect house, you can make a backup offer that will put you in first place if the initial buyer walks away.

Consider waiving or shortening contingencies. Most offers are made contingent on the buyer getting a mortgage, the appraisal being equal to the purchase price and the buyer approving the inspection. Waiving any one of those contingencies can be risky, but may be the right move in some circumstances.