Trends To Look at When Deciding To Buy or Sell a Home
Ever since COVID hit, the housing market has been an ever-changing market. Professionals in the industry are saying that those who were thinking about buying a home, are having “buyer’s remorse” due to the lack of inventory and rising mortgage rates. In fact, there are four new driving forces that both sellers and buyers need to look at.
1. Mega-Trend: Investors with Cash Buying Millions of Homes
Cash always talks and this is especially true in the current housing market. Investors have been purchasing homes recently in record numbers. In fact, it has been reported that 26% of the homes in the Dallas-Plano-Irving are owned by investors according to the Dallas Morning News. Fort-Worth-Arlington 30% of the homes are owned by investors which is 5% higher than the national report. That means that if you sell your home in the current market, more than likely it will be purchased by an investor.
“During the COVID boom, the impact of investors doing what investors do was negligible. Whatever a homeowner did with his or her property, the offers were going to be there. All that has changed,” says Brent Smith, DFW Residential Sales Manager of Acme Brick.
Now a homeowner who sells has to consider offers from investors due to the high mortgage rates. Builders are also considering their offers because of the high mortgage rates. Investors are coming in even more with cash offers. “This has encouraged investors to make cash offers on an entire subdivision or master-planned community. Importantly, these offers are not contingent on financing or traditional mortgages. Some of these investor deals are based on minimum renovation and quick flips of the properties of smaller buyers. For companies with large portfolios the traditional volume builders and their customers – typically young buyers. This activity will remain strong in 2023,” notes Brent.
2. A Recent Trend: Spec and Release
Builders are using the spec home strategy to control building costs. This means that they are not building as many custom homes, but building spec homes and releasing them. It helps control costs because they can control their profit margins.
“With the supply chain disruptions during COVID, costs exploded, and builders rightfully passed these on to the buyers, resulting in higher home prices. Unfortunately, this meant that fewer people were qualified. Of course, time will tell if buyers accept this ‘take it or leave it’ approach. My personal guess is that this trend will not continue very long,” says Smith.
3. High Income Buyers: A Bright Spot for Builders
First-time home buyers cannot keep up with the rising mortgage rates. This has not had any change for builders who are building custom homes from $600,000 to $2 million. This means that builders who are building higher end custom homes are making the sales bigger for builders in 2023. Builders are reporting more foot traffic recently.
“The builders of custom and semi-custom homes are seeing more foot traffic, and their sales could be bigger in 2023 than they were the previous year. Many of the people wealthy enough to buy this size of home are not tied to an office, so remote work is a consideration for them. Plus, typically, this buyer can pay cash or afford to make down payments of 50% of the price of the home,” explains Brent Smith.
4. Supply Chain Disruptions Are Easing
The supply chain disruptions during COVID are finally coming to an end. Companies are starting to see inventories increase thankfully and shipping disruptions are becoming a thing of the past.
“There was a time in the not-too-distant past where we were struggling to get products manufactured and out the door to our customers. Now, our challenge involves overcoming labor strategies. As with our builder customers, we are constantly looking for skilled professionals who have knowledge in the brick-making process,” explains Smith.
