The Evolving Landscape of Real Estate: Facing the New Market Realities
By Leah Draffen, Zonda’s Builder and Multifamily Executive Magazines.
Contributions from Kevin Burrell, President and COO of Buller River and Estero Development Partners
In the vast sea of real estate, currents are changing rapidly, and those who don’t adapt may be left behind. If you’re contemplating from the shores, it’s essential to recognize that these tides won’t wait. Indeed, as Kevin Burrell of Buller River and Estero Development Partners observes, the market has adjusted to its new conditions. Buyers are consistently making their moves, and with investment giants like Real Estate Funds and REITs ready to leap in, the tempo is set to rise. Regions like the Greater Charlotte MSA and SWFL are epitomes of this change – acting now might be the best strategy.
Persisting Demand in New-Home Sales Despite Rising Mortgage Hurdles
Mortgage rates, now soaring beyond 7%, would typically deter prospective buyers. Yet, Zonda’s research brings optimism to the forefront. August bore witness to a commendable 709,114 new homes sold on a seasonally adjusted annualized rate. Even when factoring out seasonal adjustments, the 59,097 homes sold mark an impressive 27.6% increase from the previous year.
But this growth doesn’t come without its shadows. Amid the upbeat sales, there’s a looming concern about seasonality and affordability.
Zonda’s chief economist, Ali Wolf, emphasizes the market’s dual nature: “It’s a dichotomous housing scenario we’re in,” she notes. While resales grapple with inventory woes, new-home sales surge, driven by builders capitalizing on their stock and enticing incentives.
Zonda lists five pillars underpinning the new-home market’s resilience:
1. Limited high-quality resale options.
2. Builder-led incentives, especially those related to mortgage rates.
3. A shrinking price disparity between fresh and existing homes.
4. Cash buyers’ emergence, undeterred by ascending rates.
5. The consumer realization that golden days of low interest rates are history.
Kevin Burrell also notes the significance of Zonda’s New Home Pending Sales Index, which clocked in at an impressive 145.6, marking a 37.1% escalation from the same period last year.
A closer look at geographical data reveals varied market performances. Phoenix, Sacramento, and San Francisco have become the poster children for growth. Conversely, Jacksonville struggles to keep up.
Nationwide, home prices continue their upward trajectory. Some builders, sensing market sentiments, raised prices, while others tread cautiously, maintaining the status quo.
Interestingly, 58% of new-home communities nationwide unveiled incentives in August. This reflects a competitive dynamic, with a 27.6% drop from 2019, pressuring a slight uptick in average sales rates per community.
Cities like Austin, Minneapolis, and Riverside/ San Bernardino, California, lead in community count growth, though others like Tampa and Seattle trail behind.
On the QMI front, there’s a 9.4% drop year-on-year, suggesting the challenges remain but are balanced by a strong attraction towards QMIs as a viable alternative.
Special Incentives from Buller River and Estero Development Partners
Aligning with the Nationals’ strategy, Buller River and Estero Development Partners are stepping up their game. Every home under our portfolio will come with 2% in SPCC to buy the rates down. Additionally, we are offering 2 years of FREE Property Management Fees. Post this period, our commitment continues as we hold the Management fees at a mere 5% exclusively for our clientele.
In conclusion, the real estate market, in all its dynamism, signals a clear message – adapt or be left behind. Kevin Burrell and other industry experts suggest that the evolving conditions are not merely transient but indicative of a new norm.
For those who are seeking opportunities in real estate investment, reach out to Tyler DiPretoro for the Greater Charlotte NC homes, and for any SWFL Homes needs, Reed Schweizer stands ready to assist you. They are the professionals who can guide you through this shifting landscape, ensuring you’re well-positioned for success.