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

From Wall Street to Main Street, Roy Oppenheim is a successful serial entrepreneur and attorney focusing on Florida real estate, foreclosure defense, loss mitigation and Internet ventures.

He founded Oppenheim Law in 1989 with his wife Ellen Pilelsky and uniquely positioned the Firm as one of Florida’s leading boutique law firms in Weston, Florida.

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.

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, he co-founded Weston Title & Escrow, the oldest title company in Weston, Florida, and he currently serves as its Vice President. In 1999, Mr. Oppenheim served a one-year term on the board of directors for Catalina Lighting, a publicly traded company on the New York Stock Exchange.

Growing up in the Bronx, Mr. Oppenheim learned to be focused on success and driven to always persevere for opportunity.

In 2009, he started the South Florida Law Blog, which was voted the best business and technology blog by the South Florida Sun-Sentinel. He also serves as an expert witness on title industry practices.

Mr. Oppenheim has also co-authored 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.

Today, Mr. Oppenheim is a sought-after legal expert on issues relating to the real estate crisis and beyond. In addition to his own blog, he also has been a contributor to Yahoo! Homes, and featured on HuffPost Live, FOX News, and Lifetime TV. In addition he has been quoted in prominent national publications, including USA Today, The New York Times and Huffington Post, among others. Mr. Oppenheim also understands the power of social media, and can be found on a variety of social media platforms.

Mr. Oppenheim also speaks fluent German.

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

Original source:  https://www.oppenheimlaw.com/who-we-are/meet-our-team/roy-d-oppenheim-esq/ 

https://www.oppenheimlaw.com

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