Clarity Real Estate Advisors

This week Pete Reeb is discussing how homebuyers are motivated by need and not by desire. Many prospective homebuyers are experiencing what we are calling price fatigue. Everything is expensive. Eggs. Cereal. Dining out. Car and home insurance. Apartments. And of course, homes. There are no “bargains” for anything anywhere anymore. As a result, the majority of homebuyers today are not desire driven, but are need-driven. Families who need a bigger home. Workers moving for a job. Households who have had a change in circumstances dictating a move. The good news is that there are still plenty of need-driven homebuyers relative to current supply levels.

This week Pete Reeb is discussing Mortgage Cancellation Rates and the #silverlining for buyers. The rise in mortgage interest rates over the last six weeks has caught many in the housing market by surprise. Rates are up about 70 basis points from a low in late September. The increase in rates has resulted in an increase in cancellation rates. In most California markets, the historical average new home cancellation rate ranges from 12% to 15%. Many markets have spiked to 15% to 20% in the last few weeks. Many of the cancellations are for completed or nearly completed homes, leading to a moderate increase in the available supply of homes and spurring builders to offer increased incentives.

This week Pete Reeb muses about seasonal price softening and wonders if this isn't a win win as incentives and price reductions help builders with clearing standing inventory and buyers with cost savings. Both the resale and new home markets are now experiencing the typical year-end slowdown in sales and the resulting softness in prices. This is a seasonal trend and not indicative of any broader market retreat. However, with year-end closing targets to meet, many new homebuilders have doubled or even tripled incentives in the last 4 to 6 weeks. Some are offering price reductions for quick closes on standing inventory ($20K to $100K). 

This week Adam Artunian is talking about the historically low inventory of new homes in southern California: There were just 453 active new home projects in the SoCal region as of Q3, which is 47% below the historical average over the last 30 years. Remarkably, the entire SoCal region has fewer active projects than the individual metros of Atlanta, Phoenix, Houston, and Atlanta. The lack of new home supply in the region has contributed to poor affordability and will likely prevent a significant price correction going forward.

This week Adam Artunian is talking about second home buyers and investors market share: Investors and 2nd-home buyers now make up 1 in 5 resale home buyers in Southern California. Depending on the county, investor market share is now more than double or triple the mid-2000s. Investors represent a completely new category of demand that didn’t exist 20 years ago. These buyers will help prevent significant price declines in the event primary home buyer demand starts to wane. #realestate #secondhomebuyer #realestateinvestor #analysis #homeequity

In the October issue of Building Industry Association of Southern California, Adam Artunian writes about #pricefatigue, #builderincentives to help offset the #highprices, and #cancellationrates. Link to article: https://bit.ly/3NIAU6U

What is Pete Reeb talking about this week? Attached homes in the Inland Empire on the rise. High prices and poor affordability have contributed to more attached new home neighborhoods in the Inland Empire. Currently about 15% of new home projects in the region offer attached homes, up from 9% in 2020. These neighborhoods have found success targeting entry-level buyers, both locally and from coastal areas, who are priced out of the single-family market and want to get on the property ladder. 

The latest issue of Building Industry Association of Southern California magazine focuses on the Building Industry Show coming up on September 19th and features an article on Clarity's own Adam Artunian. Click on the link below to see what Adam will be touching on with his keynote address as well as how to address the housing needs of the #missingmiddle. https://bit.ly/3Xp9KYr #BIASC #SouthernCaliforniaBuilder #digitalmagazine #BuildingIndustryShow #realestate

📲 Read It Now - NEW Southern California Builder Digital Magazine - The Building Industry Show Edition! Featuring: · Your Exclusive Guide to the 2024 Building Industry Show · BIS Keynote Speakers Steve Hilton and Adam Artunian · BIS Schedule, Behind the Scenes & More · The Secrets of BIS: Q&A with Laura Barber · Builders v Associates Q&A with Tim Roberts, P.E. · Meet the Builder Q&A with Linda Sandusky · Key Players of the BIA Coachella Valley, Terry Kent & Steve Sanchez · Chapter Event Photo Recaps · Member Highlights · And Much More! Read It Now: https://lnkd.in/g9F-uq8P #BIASC #SouthernCaliforniaBuilder #digitalmagazine #BuildingIndustryShow

This week Pete Reeb is talking about The No-Baby Boom and what it means for #homebuilders The #WSJ published an insightful article in July headlined “Why Americans Aren’t Having Babies.” According to the story, “Americans aren’t just waiting longer to have kids and having fewer once they start - they’re less likely to have any at all.” This has immediate major ramifications for the new home market. Coupled with already incredibly high home prices for SFD homes, the no-babies trend means that homebuilders should be building many more “smaller” townhomes than conventional SFD homes to meet the needs of childless-couple homebuyers and allow them to afford to buy. In most markets, the sweet spot for townhomes is 1,200 to 1,600 sf. #realestate #newhomecommunities #childless #homebuyers