Good afternoon —
The lack of housing inventory has created an insane housing market. I was on a call with real estate agents today from different parts of the country — Houston, Austin and Portland, Maine — who had the same story: it was taking their clients six to nine months to land a house.
Houses get listed on Thursday, see dozens of people at open houses on Saturday and often go into contract by Sunday. Lather, rinse, repeat. It's a brutal process for all involved, something Lead Analyst Logan Mohtashami has dubbed the Housing Hunger Games.
So, what's the remedy? Mohtashami doesn't think we should be holding our breath for builders to get more inventory online.
"Today we are perhaps less prone to believing that a glut of new homes is the panacea society is waiting for, but the siren call to build more homes continues to be broadcast by a host of housing pundits and social do-gooders," Mohtashami writes. "The problem with this scenario is that social do-gooders don't build homes; builders build houses, and they build homes for money, not to cure societal ills."
Two key data points for builders, Mohtashami says, are monthly supply for new homes and interest rates. Right now, demand is high and supply is under 4.3 months — clearly a signal to build. But mortgage rates are still the wild card in the calculus builders have to make. Rising rates will cool demand and leave builders holding the bag.
"Life for the builders has been good with mortgage rates at 3%. When mortgage rates go over 4%, life might not look so cheery. We know this because the last time mortgage rates hit 5%, we had a supply spike, and the builders' stock felt this, being down more than 25% from their recent peaks," Mohtashami writes.
With builders hesitant to get out over their skis, there's no short-term fix for the country's lack of inventory, unfortunately. Buyers, agents and lenders just have to keep playing the game, knowing full well the odds are not in their favor.
Until tomorrow —
Sarah Wheeler
HousingWire Editor in Chief
EmoticonEmoticon