Real Estate Information Archive

Good Monday Morning!

I recently read this article in "Realtor Magazine" about the "Top Ten Things Effecting The Real Estate Market This Year".  I found it interesting and wanted to pass it along.  Here is that article.

Remote work and mobility are expected to have the most significant impact on real estate over the next year, according to The Counselors of Real Estate’s list. The group identified current and emerging issues expected to have an influence over real estate in the 2021-2022 cycle. Remote work and mobility and its influence over commercial buildings globally was named as the top issue, followed by technology and ESG (Environment, Social, and Governance).

“The pandemic was a stress test, revealing vulnerabilities, appetites, and new and increased risks,” says Michel Couillard, global chair of The Counselors of Real Estate. “These themes present themselves in the 2021-2022 Top Ten Issues, which are highly interconnected and indicative of a newly changed and further evolving real estate environment. We have been awakened to some familiar but nascent areas of importance, namely cybersecurity, supply chain, and price instability. None of these are new concepts, but in a span of months or even just weeks, we saw high profile hacks, shortages of resources like microchips, lumber and labor, and rising prices across the board.”

Here’s a closer look at the top 10 issues on CRE’s list for 2021-2022:

1. Remote work and mobility

The pandemic greatly disrupted the workplace as many employees began to work remotely—and still are more than a year later. Commercial properties may need to be repositioned as the workplace adapts to more flexible and even shareable spaces.

“As we emerge from COVID-19 into a new world replete with local and global disruptions alike, our industry has been forced to recognize that adaptability and resiliency are paramount in real estate markets,” says Couillard. “It is undeniable that the pandemic’s disruption significantly impacted human behavior in how and where people have chosen to work. Now, with an escalating return to ‘business as usual,’ and workers beginning to return to offices, landlords, and companies nevertheless are facing repositioning of the workspace and the benefit of easily adaptable and shareable spaces. …. Property owners and managers should be flexible in order to accommodate these demand-driven changes in the desired use and location of space."

2. Technology acceleration and innovation

The Counselors of Real Estate also ranked the acceleration and adoption of technology as having the second greatest impact on the real estate industry. “The stressors were not about new tech, but about the acceptance of it,” Coulliard says. “Lockdown-driven changes in our work, the economy, in social structures, and in our personal behavior forced the industry to put any earlier reluctance aside.” Growing technology themes include artificial intelligence, machine learning, the Internet of Things, and cybersecurity, the report notes.

3. ESG at a tipping point

Environmental, social, and governance (ESG) initiatives are growing. In 2020, ESG funds more than doubled net new money intakes. “The growth in recent years is fueled by multiple drivers, including consumer shifts, regulatory requirements, trillions of dollars of wealth transferring to generation Z and millennials committed to philanthropic living, a blurring of work and societal expectations, and a full sprint to attract and retain top talent,” the report notes.

4. Logistics

“Whether it’s a port, rail line, pipeline … manufacturing facility, warehouse, farm, ranch, or grocery store, all these real estate assets are a critical segment in the supply-chain funnel that is logistics,” the report notes. “How logistics is functioning impacts the utilization of commercial real estate. Redundancy and the ability to process disruption are two key elements required to support the fast-moving, high-volume requirements of modern-day logistics in the ‘shop-online-and-deliver-to-me’ era in which we find ourselves.”

5. Infrastructure

The Civil Engineers estimates the U.S. infrastructure funding gap in 2021 to be $2.6 trillion, a 24% increase compared to 2017. “The COVID-19 pandemic, climate change, and heightened societal interest in social and economic equity have redefined infrastructure imperatives beyond the significant ongoing necessity for improved roads, bridges, airports, ports, mass transit, and other traditional infrastructure needs,” the report notes. A proposal on Capitol Hill sets out to allocate $110 billion in new spending to bridges and roads, $65 billion to expanding access to broadband, and $48.5 billion to public transit, and more. Stay updated here: NAR resource page on transportation and infrastructure in real estate

6. Housing supply and affordability

The National Association of REALTORS® and the Rosen Consulting Group released a report last week calling for a “once-in-a-generation” response to address decades of underinvestment and underbuilding in the housing market. The nation has faced a shortfall of 5.5 million to 6.8 million housing units since 2001, according to the report. Housing groups are calling on lawmakers to expand access to resources, remove barriers to incentivize new development, and more. Read more from NAR’s report on this: ‘The State of America’s Housing Stock Is Dire’

7. Political polarization

“Political friction is holding back America’s economic productivity,” the report notes. “We are squandering resources as we try to address problems that arise from the partisan divide rather than problems confronting us as common issues …. And the real estate industry’s well-being is a function of our economic growth.”

8. Economic structural change

Economic growth is mostly an unknown. As the report notes, how do we assess the real potential of the economy for sustainable growth? What numbers indicate a true trend and which are merely adjustments from the low bottom of the second quarter of 2020? Which behavioral changes made by U.S. households in the pandemic will persist? The ability for businesses to anticipate what’s next is met with challenges. For example, “even though real estate investors may reasonably expect an uptick in demand in the coming year, the ability to anticipate when occupancy and rent will rise frustrates underwriting,” the report notes. “We are observing many investors increasing their focus on property management aimed at retaining tenants and defending cash flow, while selectively seeking ‘value-add’ properties amenable to active asset management. The thinking is ‘focus on what you can control’ during this period where macro-level uncertainty is the governing headwind at the policy level in terms of the structural problems in this economy.”

9. Adaptive Reuse 2.0

The term is not new but the focus is getting bigger. CRE refers to Adaptive Reuse 2.0 as “The Neighborhood Approach.” It aims to address the challenges of what to do with defunct suburban malls and thousands of empty big-box retail stores that are surrounded by desirable and affordable neighborhoods. It requires a re-examination of suburban communities in repositioning and transforming areas that could be at risk for blight. A number of projects have been completed or are underway to help reconnect communities, prevent blight, and restore green space.

10. Bifurcation of capital markets

Debt capital markets have been volatile since the pandemic, namely public markets like commercial mortgage-backed securities, mortgage REITs, and agencies such as Freddie Mac and Fannie Mae. “Mortgage REITs took a significant hit early in the pandemic, with some recent recovery driven by restructuring credit lines and paying down credit facilities that experienced margin calls,” the report notes. Still, the “market continues to be flush with debt capital liquidity, despite property type and market uncertainty. Looking out to the remainder of 2021 and into 2022, performance will dictate the amount of distress and losses, and risk management should dictate markets, property types, leverage, loan structure, and pricing for mortgage debt. The next year should also tell us if commercial real estate debt was too rich and whether perceived risk underestimated where pricing should have been.”

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

2941 Edgewater Dr, Eugene, OR 

Price: $1,150,000    Beds: 3    Baths: 4.0    Sq Ft: 3397

Don't miss this elegant 1-level executive home in a quiet cul-de-sac. Large covered patio w/ infrared ceiling heat & a gas fire table overlook a pond & waterfall making it a relaxing & private retreat. Spacious indoor/outdoor entertaining w/ Sonos s...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The shortage of available housing continues both nationally and locally.  The escalation in home prices caused by extreme demand, high cost of lumber and building supplies and the shortage of skilled labor have all lead to a huge problem for those wanting to purchase homes.  Right now the shortage of affordable housing is extreme and the situation is not improving.  In the Eugene and Springfileld area, high housing costs, the lack of affordable building sites and the high cost of material and labor are creating a situation where home buyers are forced into the market of existing homes. This has been the perfect storm for creating a housing shortage.  The following is an article from "Realtor.com" that talks about this problem nation wide.

The numbers: Construction on new homes rose slightly in May, but high lumber prices and labor shortages have stymied builders and could leave many customers frustrated as the busy U.S. summer home-buying season gets underway.

Builders started construction on new homes at a 1.57 million annual pace in May, the U.S. Census Bureau said Wednesday.

In other words, that’s how many houses would be started in a year if construction companies did the same amount of work every month as they did in May.

The increase was somewhat of mirage, however. April’s originally reported increase of 1.57 million was trimmed to 1.52 million.

Permits to build new homes, meanwhile, fell 3% last month in another sign of the trouble builders are running into. They slipped to an annual rate of 1.68 million from a revised 1.73 million in April.

Big picture: Demand for new homes is sky high with the economy recovering from the pandemic and mortgage interest rates still near rock bottom. Housing starts and permits recently hit a 15-year peak.

The problem is, construction companies simply can’t build new homes fast enough or keep the prices within most the range of most buyers.

High costs of raw materials, a shortage of skilled workers, and a limited number of vacant lots all pose barriers to new construction.

The result: Home shoppers should expect a limited selection of properties of sale and higher home prices, potentially limiting the number of buyers.

Applications for new mortgages, for example, have declined recently in a sign that higher prices are scaring away buyers.

What’s compounded the problem is a paucity of existing homes for sale. Listings have tumbled 13% since they touched a 14-year high last October.

The housing market has been a big contributor to the U.S. economic recovery. It’s likely to continue to play a big role, just not as big as it has in the past year.

Key details: New construction on single-family houses increased by a solid 4.2% to 1.1 million rate in May, but permits declined again. Permits have fallen almost 11% from a 15-year high in January.

About two-thirds of new units built are single-family homes.

Builders also started work on more multi-family projects with at least five units: Condos, townhouses, apartment buildings and the like. They increased 4% to an annual rate of 465,000.

Permits on multi-family units also fell, however.

Construction increased sharply in the Midwest and grew more slowly in the South and West. Only the Northeast saw a decline.

Home building is much higher in all four regions compared to one year ago, but construction is likely to take place at a more subdued pace until all the bottlenecks ease.

There is some good news. Lumber prices have tumbled 40% from a record peak in May, for example. Yet some of the barriers to construction, such as a shortage of skilled labor, have existed for years and are likely to be a chronic problem.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

1122 Alderdale Dr, Junction City, OR 

Price: $450,000    Beds: 3    Baths: 2.0    Sq Ft: 1729

Beautiful open concept home with spacious living area, kitchen and large bedrooms with additional den that could be a 4th bedroom. Large private lot with huge RV parking area and room to build small shop or outdoor living structure. There is lots of...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The Real Estate market in the Eugene and Springfield area remains robust.  The number of homes going on the market for sale has continued to increase, but sales activity is so active that the inventory level remains extremely low.  As with most of the country home values remain in an inflationary state and continue to increase with demand.  Mortgage rates for the most part remain stable and low. Change is on the horizon as inflation expands with most consumer goods at high levels.  An overall decline in our national economy is on the horizon unless inflation can be kept in control.  Here are the statistics for home sales in Lane County for May of 2021.

New listings (608) increased 25.4% from the 485 listed in May 2020, and increased 16.3% from the 523 listed in April 2021.

Pending sales (554) increased 19.1% from the 465 offers accepted in May 2020, and increased 21.2% from the 457 offers accepted in April 2021.

Closed sales (394) increased 26.7% from the 311 closings in May 2020, and increased 6.5% from the 370 closings in April 2021.

Inventory and Market Time

Inventory held steady at 0.7 months in May. Total market time decreased to 15 days.

Year-To-Date Summary

Comparing the first five months of 2021 to the same period in 2020, new listings (2,345) increased 2.4%, pending sales (2,096) increased 13.8%, and closed sales (1,758) increased 14.2%.

Average and Median Sale Prices

Comparing 2021 to 2020 through May, the average sale price has increased 18.6% from $340,700 to $404,100. In the same comparison, the median sale price has increased 17.2% from $320,000 to $375,000.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

3620 Berkshire St, Eugene, OR 

Price: $449,000    Beds: 3    Baths: 2.0    Sq Ft: 1455

Beautifully maintained home in desirable Ferry Street area. High ceilings and vaulted areas make home feel open and spacious. Backyard has gazebo with fire pit and wonderful landscaping with private feel to it. Sideyard could potentially be area for...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

A shortage of homes for sale plagues the nation and has created a hot market for home sellers.  Adding to this is the continuation of extremely low and favorable mortgage interest rates.  Rates at this time are well below that of last year at the same time and it looks like we should continue to enjoy the low rates for some time with some moderate increases.  Here is an update on recent mortgage rates.

Mortgage rates were on the rise last week but remained just below 3%, offering borrowers another opportunity to lock in historically low rates.

Still, the National Association of REALTORS® cautions that borrowers should expect mortgage rates to increase modestly in the following months as the economy continues to recover. NAR forecasts the 30-year fixed-rate mortgage to average 3.20% in 2021.

“Home prices continue to accelerate while inventory remains low and new home construction cannot happen fast enough,” says Sam Khater, Freddie Mac’s chief economist. “There are many potential home buyers who would like to take advantage of low mortgage rates, but competition is strong. For homeowners, however, continued low rates make refinancing an option worth considering.”

Freddie Mac reports the following national averages with rates for the week ending June 3:

• 30-year fixed-rate mortgages: averaged 2.99%, with an average 0.6 point, up from last week’s 2.95% average. Last year at this time, 30-year rates averaged 3.18%.


• 15-year fixed-rate mortgages: averaged 2.27%, with an average 0.6 point, unchanged from last week. A year ago, 15-year rates averaged 2.62%.


• 5-year hybrid adjustable-rate mortgages: averaged 2.64%, with an average 0.2 point, up from last week’s 2.59% average. A year ago, 5-year ARMs averaged 3.10%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

Have An Awesome Week!

Stay Healthy! Stay Safe! Remain Positive! Trust in God!

THIS WEEKS HOT HOME LISTING!

3620 Berkshire St, Eugene, OR 

Price: $449,000    Beds: 3    Baths: 2.0    Sq Ft: 1455

Beautifully maintained home in desirable Ferry Street area. High ceilings and vaulted areas make home feel open and spacious. Backyard has gazebo with fire pit and wonderful landscaping with private feel to it. Sideyard could potentially be area for...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!