Century 21 chief executive Michael Miedler said that the American real estate market will continue to be heated.
During an interview with Fox Business anchor Maria Bartiromo, Miedler explained that the market is hot because “a lot of buyers are trying to rush in and beat any more increases in the mortgage rate.” He continues “to see the market moving in a very kind of fast direction as folks have a lot of pent-up demand in trying to buy homes here in this country.”
Meanwhile, there is a low supply of new homes: “From the downturn that happened in 2008 to where we are at now, we are at historic lows on where folks are building.”
“Here is the truth of the matter; between 2012 and 2021 there were close to 12 million new household formations and we only put 7 million homes built in this country, so we have to double the pace in the next five years to catch up with the demand that’s out there,” he explained.
According to the National Association of Realtors’ Profile of Home Buyers and Sellers survey — which monitored the behavior of buyers between July 2020 and June 2021 — the American real estate market currently favors sellers:
Among repeat home buyers and home sellers over the last year, a key factor for moving was the desire to live closer to family and friends, while an equally important motivator was the need for more space or a bigger home. Sellers as a whole were able to benefit in these transactions, typically earning their full asking price, and selling in one week.
Other trends point to the same conclusion:
For all sellers, the most commonly cited reason for selling their home was the desire to move closer to friends and family (18%), that it was too small (17%), and the neighborhood had become less desirable (11%).
For recently sold homes, the final sales price was a median of 100% of the final listing price. Only 26% of all sellers offered incentives to attract buyers, a drop from 46% of all sellers last year.
“Buyers moving quickly during the pandemic, coupled with all-time-low inventory, led to a decline in time on market to the shortest ever recorded, which was just one week,” National Association of Realtors executive Jessica Lautz said.
Amid the tight housing supply, investment banks are buying single-family homes to profit upon increasing rent and property values. CNN Business summarized:
In the first three months of this year, nearly a quarter of all homes sold in the United States were going to investors. That’s a broad umbrella that covers everything from mega institutions to individuals buying vacation homes, but BlackRock, JPMorgan Chase and Goldman Sachs were among the big-name buyers.
Institutional investors still own only about 2% of all single-family rentals in the United States, or roughly 300,000 homes, according to John Burns research director Rick Palacios.
Meanwhile, China — which is now encouraging couples to have more children — announced regulations upon its real estate sector to promote affordability for young families. Chinese President Xi Jinping says that “housing is for living in and not for speculation.”