Permits are also up year-to-date. But due to under-building for years, even at higher construction rates, it will take several years for new home supply to catch up to the market need. Minor adjustments to the supply-and- demand balance can make a meaningful difference. Florida and Texas have seen more supply come to market over the last year than most other states and, in both cases, have seen home price appreciation slow down—and even seen prices decline on a year-over-year basis in some markets. That’s a hopeful sign from an affordability standpoint. Most economists who follow the housing market believe mortgage rates will begin to come down once the Federal Reserve executes its long- awaited cut to the fed funds rate, perhaps as early as September, allowing mortgage rates to drop at least modestly from 7% into the mid-6% range. OPPORTUNITY AMID THE DOOM AND GLOOM Despite all the gloomy news, all is not lost for real estate investors. According to a recent report from ATTOM, the number of homes flipped in the first quarter increased for the first time in three quarters to reach almost 68,000 sales. Gross margins also improved for the third time in the past four quarters to almost 30%. Demand is still there for move-in ready homes that are priced appropriately. Although millions of prospective homebuyers have been temporarily priced out of the market, they still need to live somewhere and have become prospective tenants for investors who own rental properties. Asking rent for
16 | think realty magazine :: september - october 2024
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