The Cool-Down of the Housing Market

Written by Posted On Monday, 09 August 2021 05:45

The housing boom that we have experienced for the past year is slowing down. In fact, sales of new homes decreased in June to the lowest level since the early days of the pandemic in April 2020, according to the U.S. Census Bureau. Sales of new single family homes decreased to 19.4% below June 2020 levels, and are 6.6% of May’s rate. While the median price of a newly built home in June rose approximately 6% from June, 2020, it is significantly less compared to the 15%-20% annual gains seen in previous months.

What happened to the housing market?

During this past year, home prices remained incredibly strong due to increased demand and low supply. While mortgage rates were at record lows, enabling more and more of us to purchase homes, many remain locked out of home ownership because they are unable to afford homes as they either do not have a down payment or their income does not qualify them for a mortgage as housing prices continue to rise.

Yet, while residential purchasing on the higher end of the market remains strong, the fact remains that there still is not a lot of affordable homes on the market. One reason for this is the skyrocketing construction costs, especially in lumber which has spiked more than 300% during the pandemic—which is still 75% more than its 2019 average. As a result, builders are unable to build affordable homes. Further, shortages of labor and  appliances are adding to delays in homebuilding which, in turn, causes prices to rise.  As builder analyst Ivy Zelman indicated, “We are shifting our tone on the housing market based on our analysis of proprietary data showing early signs of a cool down.”

Another major reason for the housing slowdown is that purchasers in June faced higher mortgage rates, which rose to nearly a quarter of a percentage point. For some purchasers who were  already stretched by increased home prices, higher interest rates preclude some from purchasing as they have less of a financial  cushion to do so.

What is next?

The question remains: is the issue the affordability of new housing or increased pricing attributable to labor shortages and increased builder costs causing the housing market to start cooling? The answer: both. There are always market factors—increased financing costs, supply and demand—that are attributable to the ups and down of the real estate market in general. And, while inventory for new homes for sale jumped from 5.5-month supply in May to a 6.3-month supply in June while last fall, the inventory was a low of 3.5 months, there is a divide of those who can afford the homes and those who can not.

We may agree that having such a strong real estate market as we have experienced during this past year is not sustainable. Markets rise and fall. And, at least for now, the pundits believe that the housing boom of the COVID-19 pandemic has begun to soften.

Should you have any legal questions about a potential purchase or sale or another legal matter, our team at Oppenheim Law can be reached at 954-384-6114. Should you have any questions or need assistance with a residential real estate purchase or sale, our title company, Weston Title & Escrow, Inc. is able to help you and can be reached at 954-384-6168.

Roy Oppenheim

From the Trenches

 

originally posted at: https://southfloridalawblog.com/the-cool-down-of-the-housing-market/

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Roy Oppenheim

Roy Oppenheim has been practicing law since 1987 focusing his practice on all phases of real estate and real estate development and redevelopment from land acquisition to multifamily, retail, office hotel, industrial and mixed use development, as well as single family home development for sale and rent. Mr. Oppenheim has routinely represented developers, investors, home buyers and lenders in these commercial transactions in Florida and elsewhere in the United States. He has been involved in virtually every stage of the development process from acquisition, due diligence, title insurance, financing and closing of such projects. Mr. Oppenheim’s client turn to him for his sharp legal acumen along with his entrepreneurial background that allows Mr. Oppenheim to approach each matter from a pragmatic and refreshing background. Further, clients enjoy Mr. Oppenheim’s infectious passion for his involvement in their business as well as his unbiased legal opinion based on a holistic approach; rather than from a siloed perspective. From analyzing, negotiating to structuring deals, Mr. Oppenheim’s clients turn to him time and again for his advice. Mr. Oppenheim also represents Florida real estate brokers and Realtors, individual buyers, and sellers in connection with the purchase and sale of Florida real property as well as litigates real estate disputes involving both residential and commercial properties. Mr. Oppenheim also served as outside general counsel for various Florida companies over the past 30 years providing sound legal advice to start ups as well as mature businesses concerning various business and corporate matters including governance, expansion, acquisitions, borrowing, commercial litigation, and employment related matters. The myriad of businesses Mr. Oppenheim represents is vast including from the fields of retail, hospitality, entertainment, healthcare, technology, import-export, and wholesale. Many of these businesses have both a physical and/ or online presence. Mr. Oppenheim here again brings his over three decades of legal knowledge and business experience to his clients and their respective businesses. After Working for Milbank Tweed on Wall Street and White & Case in Miami, Mr. Oppenheim founded Oppenheim Law in 1989 with his wife Ellen Pilelsky where they began representing Arvida development and its various home builders amongst numerous national banks such as Northern Trust, Chase Bank and SunTrust Bank for over 15 years. Serving national, international, and local clients, Mr. Oppenheim has the highest rating (A-V) conferred by Martindale Hubbell Law Directory, the most respected directory of lawyers and law firms in the U.S. He has also been selected as a “Best Real Estate Lawyer in the United States” since 2012, a designation of only 5% of all Lawyers. The Firm also has a 10.0 rating, the highest rating from AVVO another distinguished national rating service. In 1989, Mr. Oppenheim also co-founded and served as general counsel to ShopSmart Corp., the company that originated and owned the GNC Gold Card Program, a program that continues to this day and was one of the first cross-promotional programs of its kind. In addition, in 1994, Roy co-founded Weston Title & Escrow, the oldest title company in Weston, Florida that serves all of Florida and has closed in excess of three billion dollars in transactions. Mr. Oppenheim currently serves as its Senior Vice President. In 1999, Mr. Oppenheim also served a one-year term on the board of directors for Catalina Lighting, a publicly traded company on the New York Stock Exchange. Mr. Oppenheim is also designated by the Florida Secretary of State as an International Civil Law Notary, one of only 137 out of 106,000 attorneys in the State. In 2008, during the foreclosure crisis and the Great Recession, Mr. Oppenheim and his team of lawyers represented 1000’s of homeowners that were unable to pay their mortgages and were facing foreclosures. Facing daunting odds and the rath of large foreclosure mills funded by the big banks Mr. Oppenheim helped establish a new legal practice area of foreclosure defense while helping these homeowners defend themselves against the banks. During that time Mr. Oppenheim became an outspoken critic of the banks and started the Southfloridalawbog.com which was voted the best business and technology blog by the South Florida Sun-Sentinel. The blog was syndicated to Yahoo! Homes, and Newsweek. Mr. Oppenheim routinely appeared on HuffPost Live, FOX News, and Lifetime TV and on WLRN Radio. In addition, he has been quoted in prominent national publications, including USA Today, The New York Times and Huffington Post, among others. Mr. Oppenheim has also co-authored and two law review articles, Deconstructing The Black Magic of Securitized Trusts, published in the Stetson University Law Review’s Spring 2012 Edition, and The Emperor’s New Clothes, published in the William & Mary Business Law Review Volume 6. Both addresses systemic legal problems with the residential foreclosure process at the time. During that time Mr. Oppenheim became an outspoken critic of the banks and started the Southfloridalawbog.com which was voted the best business and technology blog by the South Florida Sun-Sentinel. The blog was syndicated to Yahoo! Homes, and Newsweek. Mr. Oppenheim routinely appeared on HuffPost Live, FOX News, and Lifetime TV and on WLRN Radio. In addition, he has been quoted in prominent national publications, including USA Today, The New York Times and Huffington Post, among others. Mr. Oppenheim has also co-authored and two law review articles, Deconstructing The Black Magic of Securitized Trusts, published in the Stetson University Law Review’s Spring 2012 Edition, and The Emperor’s New Clothes, published in the William & Mary Business Law Review Volume 6. Both addresses systemic legal problems with the residential foreclosure process at the time. Admissions Florida Bar, 1987; Member of the Real Property Probate and Trust Law Section New York Bar, 1987; United States District for the Southern and Eastern Districts of New York, 1987 U.S. District Court, Southern and Middle Districts of Florida, 1993 Education Princeton University, A.B., cum laude, 1982 Northwestern University School of Law, J.D., 1986 Member of the Northwestern University Law Review Member of the National Moot Court Team

https://www.oppenheimlaw.com

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