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Are You Prepared for a Housing Inventory Surplus?

It goes without saying that real estate supply and demand are off-kilter. Home sales are continuing to fall due to housing shortages. As of late May 2021, existing home sales were down 2.7% to $5.8 million, marking the third consecutive month that activity has dropped off.

In recent times, there have been a number of severe disruptions in the supply chains that collectively led to the current situation, many of which revolve around lumber. The reasons include the U.S.-China trade war, tariffs imposed on lumber imports, supply shortage in transport, pandemic-driven home improvement craze, and new construction. The supply bottleneck in lumber, for one, has sparked much higher prices. In May 2021, lumber prices hit an all-time high of $1,686 per thousand board feet, an increase of 406% from the $333 it was trading at the same time last year.

Historically low interest rates have also played a significant role in fueling the demand for homes. These low rates coupled with the ability to finance over a 30-year term have made housing much more affordable for a large swath of buyers.

Relief may be right around the corner, however. National Association of Realtor (NAR) chief economist Lawrence Yun predicts that we should see further inventory come to the market later this year with more covid-19 vaccinations being administered. He also believes that potential home sellers will become increasingly comfortable listing and showing their homes. In addition, as forbearance activity declines, more foreclosures are likely to hit the market.

With the anticipated uptick in housing inventory on the horizon, real estate investors must stay on their game and prepare ahead. Ridge Lending Group offers a diverse product line available to clients, including conventional loans, commercial loans, short-term bridge loans, non-QM, and unsecured lines of credit.

To learn more about our mortgage programs and products, watch the video below or give us a call today! We would love to help you work with the properties you currently have and multiply your investment portfolio.

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Ridge Lending Group

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