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| COVID Pandemic Market trend. 8/Please click on image to enlarge. |
U.S. Supreme Court ends CDC eviction moratorium.
8/3/21 UPDATE:
The CDC Eviction Moratorium expired on July 31, 2021. Congress didn't impose a new moratorium.
However, the CDC issued a "new" moratorium today. They stated this is not an extension of the previous moratorium that the Supreme Court ruled against. Instead, this is a "new moratorium" that only affects "Areas of Substantial and High Transmission" of COVID-19 - which is about 90 percent of the USA.
However, the CDC issued a "new" moratorium today. They stated this is not an extension of the previous moratorium that the Supreme Court ruled against. Instead, this is a "new moratorium" that only affects "Areas of Substantial and High Transmission" of COVID-19 - which is about 90 percent of the USA.
Alabama and Georgia associations of REALTORS were joined by the national association in lawsuits to stop this action.
6/30/21 UPDATE:
However, the court declined to lift the current moratorium. Therefore, the eviction moratorium remains until July 31.
6/28/21 UPDATE:
Action has kicked the can another month. Expect historic housing shortages to continue until around the time school starts.
5/5/21 UPDATE:
NBC reports, “The judge noted that while Congress had ratified earlier extensions of the moratorium order, it had not done so for the latest extension.
It's unclear what the immediate impact of the ruling will be.”
The federal government initiated eviction and foreclosure moratoriums through the CARES Act on 27 March 2020. It has been extended a few times but is currently set to expire at the end of July. This situation means homes should get the highest sale and lease income until about mid-July unless the mandates are extended again.
If a homeowner plans to sell or lease a house, it's ideal to do it before the middle of July to take advantage of the historic housing shortage. I have many resources on this blog to help get your house "show ready." The seller section explains everything in detail.
I'm certified to help homeowners navigate a buy-before-you-sell program that can also include a small loan to fix up the current house to get it “market ready” for top dollar.
Now is also a great time because rates are again near historic lows, which allows buyers to get more for their money.
However, building materials are in short supply. This has caused monthly increases in new construction since last May. Therefore, prices are unlikely to stop increasing until housing inventory and building material supplies increase.
Educating my clients on the home buying process is a hallmark of my business. If you want to know the entire process, follow this link to a free Home Buyer Guide (link) that I wrote.
The guide explains both preowned and new build purchases. It should answer every question you have, and some you haven't considered yet. You can read it a little at a time or understand everything from the beginning. You're welcome to share it with your friends and associates.
Current “Housing Crisis”
All markets are temporary. So is this one. It exists due to artificial controls of the government stopping the regular free trade of an open market.
For health reasons, the government placed eviction and foreclosure moratoriums on the market. Some folks fell into desperate situations while others merely took advantage of the situation. Either way, there is ZERO motivation for a person living for no cost (rent or mortgage) in a 5-bed, 4-bath house with a swimming pool, etc... to move a family into a small apartment at inflated rent.
This situation is the current housing crisis. The normal cleansing mechanisms (eviction and foreclosure) are clogged.
Unless the government extends the moratoriums again, they are set to expire on the last day of July. This means the evictions start on July 1 while the foreclosures start a 6-month countdown to their expected final date of 31 Dec. 2021.
Rental Market
If the rental properties aren't destroyed by current tenants (many are), those owners will likely sell many to residential buyers to get huge profits from "challenged" properties before the eventual market correction.
This should relieve some of the housing pressure and stabilize the market through the end of the summer. Most families with school-age kids settle in August or early September - both rental and purchase.
Other landlords will fix the properties to take advantage of the lease shortage. They'll also scrutinize future applicants harder than ever because demand will remain high while a wave of recently evicted tenants flood the market.
Nonetheless, rent should continue to rise because the rental market has not only mirrored the regular market it has been supercharged. For many weeks listed-to-leased has been at a 3:4 ratio when there should always be more properties coming onto the market than leased.
In a normal market, failure to lease causes many homes to go onto the residential market for liquidation. That threat doesn't exist now. The only control is price, which can be easily adjusted.
Residential Market
With the release of rental houses for liquidation (sale), there should also be some relief in the residential market through the end of the summer. Buyers should be wary of houses that were formerly rental properties during this time. Expect many investor-grade "flip" homes to come on the market with a fresh coat of paint and not much else.
Meanwhile, homeowners with equity in their properties that can't arrange financial extensions, will need to liquidate their homes. The smart ones will strike fast to get the most money. Others will drag it out a few months because they don't want to move to a lease property or can't move because their credit is destroyed. Nonetheless, they should all eventually sell to claim the equity rather than hand it over to the bank.
Those sellers in the second group are most likely to experience the back-to-school slow down. They may also require a short sale (sell the house for less than is owed to the bank). The bank would need to agree to the short sale. These issues will seriously slow down the transaction and put a drag on the market. While the remainder of the market is speeding along, these homes will artificially increase the average days on market and lower the average price. Expect two lanes of traffic during this phase of the market.
Unless the government steps in, the final group should arrive on New Year’s Day 2022. These are the foreclosure homes.
Most of these homes will probably be in horrible condition. They have been occupied for many months – possibly more than a year - by someone who knew they would lose the house. There was no motivation to maintain the property. Even worse, they may have become angry about the circumstances and taken it out on the property with a sledgehammer or something worse.
Contractors love these “projects” because they can get them for a relatively low price and make up the difference with “sweat equity” and skills. Most folks don’t have those skills, or the spare cash needed to get the property up to lease or resale shape quickly.
Pre-foreclosures and short sales can have additional baggage that doesn’t appear until the final steps. There may be tax liens or other problems with the property itself that might kill the deal after months of negotiations and related costs.
Because the market should still lean toward the seller side, don't expect too much of a foreclosure discount - if any.
While there are a few amazing opportunities in this sphere, many turn out to be money pits. I strongly advise my clients to avoid foreclosures unless they know the property’s history and hopefully its former owner. These houses are often purchased without access to the inside of the property before it is bought.
New Build
Most new build properties in southern Collin and Denton counties currently have two-year waiting lists. Some have completely stopped taking new orders because the material costs are outpacing expectations.
The pace of construction is slow due to material shortages, but also a lack of city employees - specifically related to code enforcement and building permits. The shortage is compounded by the pandemic.
The new build waiting lists should dwindle as more buyers find preowned homes that will meet their needs after the moratoriums are lifted. As building materials and capacity increase (mostly due to businesses reopening after the pandemic), new-build price increases should slow or stabilize. As buyers evaporate, inventory homes should return and may come with discounts if material prices have dipped along with demand.
There's no way to tell when this will happen because there are 24-month waiting lists across town. It could start to appear as soon as mid-September or may take until sometime in 2022. However, expect some bargain inventory homes after 15 Dec. 2021 because the builders don't want to pay those taxes.
The Bottom Line
If the government doesn't extend the moratoriums again, sellers and landlords should make the most money between now and July 1. I expect sweet spots for buyers and leases around the end of July and in mid-September through early October. However, there won’t be any “bargains” because most houses have equity and there is plenty of pent-up demand.
I've Got Your Six!
Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212
markhancockrealty@gmail.com
_________________
4/20/21
Since the state of Texas lifted the mask mandate and allowed 100 percent capacity at all businesses and facilities, it’s time to unwind the pandemic.
The federal government initiated eviction and foreclosure moratoriums through the CARES Act on 27 March 2020. It has been extended a few times but is currently set to expire at the end of July. This situation means homes should get the highest sale and lease income until about mid-July unless the mandates are extended again.
If a homeowner plans to sell or lease a house, it's ideal to do it before the middle of July to take advantage of the historic housing shortage. I have many resources on this blog to help get your house "show ready." The seller section explains everything in detail.
I'm certified to help homeowners navigate a buy-before-you-sell program that can also include a small loan to fix up the current house to get it “market ready” for top dollar.
Now is also a great time because rates are again near historic lows, which allows buyers to get more for their money.
However, building materials are in short supply. This has caused monthly increases in new construction since last May. Therefore, prices are unlikely to stop increasing until housing inventory and building material supplies increase.
Educating my clients on the home buying process is a hallmark of my business. If you want to know the entire process, follow this link to a free Home Buyer Guide (link) that I wrote.
The guide explains both preowned and new build purchases. It should answer every question you have, and some you haven't considered yet. You can read it a little at a time or understand everything from the beginning. You're welcome to share it with your friends and associates.
 |
| Housing shortages began with the Covid-19 pandemic and associated CARES Act eviction and foreclosure moratoriums on 27 March 2020. |
All markets are temporary. So is this one. It exists due to artificial controls of the government stopping the regular free trade of an open market.
For health reasons, the government placed eviction and foreclosure moratoriums on the market. Some folks fell into desperate situations while others merely took advantage of the situation. Either way, there is ZERO motivation for a person living for no cost (rent or mortgage) in a 5-bed, 4-bath house with a swimming pool, etc... to move a family into a small apartment at inflated rent.
This situation is the current housing crisis. The normal cleansing mechanisms (eviction and foreclosure) are clogged.
Unless the government extends the moratoriums again, they are set to expire on the last day of July. This means the evictions start on July 1 while the foreclosures start a 6-month countdown to their expected final date of 31 Dec. 2021.
Rental Market
If the rental properties aren't destroyed by current tenants (many are), those owners will likely sell many to residential buyers to get huge profits from "challenged" properties before the eventual market correction.
This should relieve some of the housing pressure and stabilize the market through the end of the summer. Most families with school-age kids settle in August or early September - both rental and purchase.
Other landlords will fix the properties to take advantage of the lease shortage. They'll also scrutinize future applicants harder than ever because demand will remain high while a wave of recently evicted tenants flood the market.
Nonetheless, rent should continue to rise because the rental market has not only mirrored the regular market it has been supercharged. For many weeks listed-to-leased has been at a 3:4 ratio when there should always be more properties coming onto the market than leased.
In a normal market, failure to lease causes many homes to go onto the residential market for liquidation. That threat doesn't exist now. The only control is price, which can be easily adjusted.
Residential Market
With the release of rental houses for liquidation (sale), there should also be some relief in the residential market through the end of the summer. Buyers should be wary of houses that were formerly rental properties during this time. Expect many investor-grade "flip" homes to come on the market with a fresh coat of paint and not much else.
Meanwhile, homeowners with equity in their properties that can't arrange financial extensions, will need to liquidate their homes. The smart ones will strike fast to get the most money. Others will drag it out a few months because they don't want to move to a lease property or can't move because their credit is destroyed. Nonetheless, they should all eventually sell to claim the equity rather than hand it over to the bank.
Those sellers in the second group are most likely to experience the back-to-school slow down. They may also require a short sale (sell the house for less than is owed to the bank). The bank would need to agree to the short sale. These issues will seriously slow down the transaction and put a drag on the market. While the remainder of the market is speeding along, these homes will artificially increase the average days on market and lower the average price. Expect two lanes of traffic during this phase of the market.
Unless the government steps in, the final group should arrive on New Year’s Day 2022. These are the foreclosure homes.
Most of these homes will probably be in horrible condition. They have been occupied for many months – possibly more than a year - by someone who knew they would lose the house. There was no motivation to maintain the property. Even worse, they may have become angry about the circumstances and taken it out on the property with a sledgehammer or something worse.
Contractors love these “projects” because they can get them for a relatively low price and make up the difference with “sweat equity” and skills. Most folks don’t have those skills, or the spare cash needed to get the property up to lease or resale shape quickly.
Pre-foreclosures and short sales can have additional baggage that doesn’t appear until the final steps. There may be tax liens or other problems with the property itself that might kill the deal after months of negotiations and related costs.
Because the market should still lean toward the seller side, don't expect too much of a foreclosure discount - if any.
While there are a few amazing opportunities in this sphere, many turn out to be money pits. I strongly advise my clients to avoid foreclosures unless they know the property’s history and hopefully its former owner. These houses are often purchased without access to the inside of the property before it is bought.
 |
| New houses are in various phases of construction at Cambridge Crossing in Celina. |
Most new build properties in southern Collin and Denton counties currently have two-year waiting lists. Some have completely stopped taking new orders because the material costs are outpacing expectations.
The pace of construction is slow due to material shortages, but also a lack of city employees - specifically related to code enforcement and building permits. The shortage is compounded by the pandemic.
The new build waiting lists should dwindle as more buyers find preowned homes that will meet their needs after the moratoriums are lifted. As building materials and capacity increase (mostly due to businesses reopening after the pandemic), new-build price increases should slow or stabilize. As buyers evaporate, inventory homes should return and may come with discounts if material prices have dipped along with demand.
There's no way to tell when this will happen because there are 24-month waiting lists across town. It could start to appear as soon as mid-September or may take until sometime in 2022. However, expect some bargain inventory homes after 15 Dec. 2021 because the builders don't want to pay those taxes.
The Bottom Line
If the government doesn't extend the moratoriums again, sellers and landlords should make the most money between now and July 1. I expect sweet spots for buyers and leases around the end of July and in mid-September through early October. However, there won’t be any “bargains” because most houses have equity and there is plenty of pent-up demand.
I've Got Your Six!
Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212
markhancockrealty@gmail.com
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