Winston Salem | Market Forecast Points to Continuing Growth

Let Carolina Living Real Estate Help You with All Your Winston Salem Area Real Estate Decisions.

With all the competing media reports and surveys, there are many questions you may have about the housing market as we approach Q4 2021. We spoke with Dan Habib of MBS Highway to get his thoughts on a market forecast, so you can better build your business!

Interest Rates

• Rates should remain attractive until at least the end of the year.
• The Fed has been buying quite a few mortgage-backed securities (MBS), but they soon will need to begin “tapering” (slowly reducing or eliminating those purchases), which may lead to a rise in rates. They will give plenty of advanced notice.

Is the Housing Boom Over?

• No, housing is strong, and there are not bubble-like conditions as in 2007. Today, there is not enough inventory, and homes are appreciating roughly 16-17% year-over-year.
• The latest Mortgage Bankers Association data shows that home purchase applications are down 18% year-over-year, but this does not capture cash buyers. When you figure in their big increase year-over-year, the decline in applications is closer to 9%.
• Demand will continue to increase due to demographics, even with higher prices. The median age of first-time homebuyers is 33, and that age group will grow in coming years.

Builder Challenges

• Builders are struggling to get new homes on the market due to elevated material costs, labor costs, and supply challenges.
• It’s not profitable for builders to provide the lower-cost-to-build homes that are needed to boost inventory.
• While lumber prices have come down, the aggregate residential material costs are up 13% from the beginning of the year. However, the National Association of Home Builders (NAHB) expects that production challenges should ease over the coming months, and the market should return to more normal conditions.

To Buy or Rent?

• Renting is still not the best option for consumers. The largest landlord in the U.S., Invitation Homes, as well as Apartment List, have both reported almost 14% year-to-date increases on new rents. If this pace were to continue, rental increases would see a 20% rise in 2021. Remember that rents can continue to move higher each year: Invitation Homes reported a 6% increase on renewals.
• Because of increasing demand and tight supply, home values should be well-supported in the future, meaning buying is a better choice than renting.

Contact me today with your questions about the market or any homebuying needs!