Our next podcast series has arrived!
This series focuses on both the buyer and seller sides of investment real estate in the current market. Listen in as Marcia and I take a look at the factors behind the current supply-side shortage.
René Nelson, Eugene commercial real estate broker
Marcia Edwards, Eugene residential real estate broker
Buying & Selling in the Current Market – Part 1
Marcia Edwards: Well, it’s true. We have a supply-side problem at every level of real estate throughout the country. That’s amazing.
René Nelson: It really is.
Marcia Edwards: And you know, it hasn’t snuck up on us. People think it just happened. I’ve seen, since 2017, the supply-side, the inventory, has shortened, over time, continually since 2017, for the past two years. Pre-COVID, this was a thing.
René Nelson: Yes, and you’re seeing that in available opportunities for listings, right, it’s still less than a month?
Marcia Edwards: That’s right. The inventory side is down to.4 of one month. So that means, if all the properties that are on the market right now, continue to sell at the rate they’ve been selling, we’d be out of inventory in less than a month.
René Nelson: Wow. That’s crazy.
Marcia Edwards: Yeah, it is. So let’s talk about why it is, and what’s going to happen next. I think that Oregon is not unique. It is a nationwide trend, and it’s clear that there’s a reason for it that is somewhat related to COVID. So we could talk about the supply-side being new inventory. You gotta make more of it, if there’s more people that want to buy, and that’s one answer. Another answer is people with used homes, getting out of the homes they’re in, and that may be new construction also, because they’re building for those people so they can clear the inventory to add tenants and turn them into buyers.
René Nelson: Yeah, that makes sense. Well, I know that, during COVID, a lot of the saw mills and the guys that were making lumber, they thought that we were kind of headed into a recession. So they slowed way down. The builders took a little bit of a blip, but then, with everybody being home and saying, “Wow. I don’t like my house. I want to remodel.” They started home improvement projects. Plus, the builders were then being asked, “Build me a new house.” So I know that did a lot for the demand, and also, the wild fires didn’t help, ’cause that burned up a lot of timber in our Pacific Northwest.
Marcia Edwards: Right. So the supply-side is not just supply of ready-built homes. There is a deep shortage in a lot of the materials, like, resin, where you’ve gotta manufacture materials for the builds and that’s not there or available. So there’s a shortage down the food chain, so to speak.
René Nelson: Yeah, absolutely, and I know lumber has quadrupled. Could you imagine being a builder trying to quote a number to a homeowner for a new build and your lumber is doubling and quadrupling?
Marcia Edwards: Exactly, and over the time from the quote to the build-out, there’s the permit process, the engineering, the making the plans, the architect, all of that has to fit in between their bid and their estimate and the actually build out, which means time. Means the pricing can’t be pinned down. So it’s difficult to be a builder, especially in a spec home, where you don’t know exactly what the sales price will be.
René is available to answer your real estate investment questions. Schedule a 15-minute discovery call to better understand your investments and the market today.
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