Even with the dip in inventory, the market is still outperforming pre-pandemic levels. Builders are slowing down production to catch up with a backlog of projects while trying to keep construction prices in check. Lastly, home flipping is just one way the residential real estate market will stand in stark contrast to the commercial real estate market moving forward.
Low Inventory Impacting Existing Home Sales
- Even with the huge dip in inventory, the market is still outperforming pre-pandemic levels.
- Total existing-home sales fell to an annual rate of 6.22 million in February but sales are still up 9.1% compared to a year ago.
- Many Americans have been saving money (and clorox wipes) so there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy!
- All-cash sales are a lot less than some may think… they accounted for only 22% of transactions in February, up 2% from last year
Builders Slow Production to Catch Up With Demand
- Builders are slowing down production to catch up with a backlog of projects while trying to keep construction prices in check.
- Builders are reporting that increases in material costs—notably on lumber—continue to challenge growth in new home construction.
- Additionally, 70% of builders are intentionally slowing or pausing sales to better align contracts with production capacity, making drawing market conclusions more difficult.
How The Pandemic Has Affected The U.S. Home Flipping Market
- Foreclosures in the U.S. dropped in 2020. As reported by ATTOM Data Solutions, foreclosures were down 93% “from a peak of nearly 2.9 million in 2010, to the lowest level since tracking began in 2005.”
- Get ready to start knocking doors! Once that foreclosure moratorium ends on June 30th this year, more distressed properties will enter the market.
- On the flip side, savvy investors will not try to time the market. Instead, they’ll try to benefit from the low interest rates. They’ll refinance and build equity on their homes, using rental income to pay off their mortgages while simultaneously increasing their monthly profits.
- More Home Flippers Will Take Advantage Of Green Energy Incentives as they start rehabbing their properties, more home flippers will look to take advantage of existing energy incentives.
Want to make sure your real estate business is taking advantage of these changing market conditions? Schedule a FREE business analysis with our team today!
