2020's Boom, Mini-Bust, and Boom | John Burns Research and Consulting

Many forget that the housing market was booming in January and February.

In this podcast, host Dean Wehrli and JBREC’s own Jody Kahn and Devyn Bachman take us on a quick history trip from the pre-COVID past to the up-to-the-minute present. They trace a market that went from boom to bust to a bigger boom. Here is how it played out:

Jody and Devyn manage JBREC’s best-in-class builder survey, plus the quarterly residential land survey and the first survey-driven national single-family rental index. Informed by these channel checks, collaboration with JBREC’s national consulting team, and constant conversations with research clients, Jody and Devyn offer unique visibility into housing market trends.

Featured guest

Jody Kahn, Senior Vice President, John Burns Research and Consulting

Devyn Bachman, Senior Vice President, John Burns Research and Consulting

Demand

2020 began with a bang! Builders were enjoying a strong spring sales lift.

At the end of March, we downgraded every market in the country to our Slow or Very Slow new home sales and pricing ratings.

Builders reported 60%+ YOY sales growth for the 4th consecutive month in September 2020.

Supply

Finished inventory fell quickly as buyers snapped up quick move-in homes and builders paused construction.

Materials and labor costs escalated quickly. Nationally, materials and labor costs increased by nearly 10% YOY as of 3Q20, doubling from 5% YOY one year ago.

Land and lot shortages continue to challenge builders. Community counts have declined by 6% YOY as brisk sales chew through lot positions ahead of schedule.

Pricing

Surging new home demand and plummeting supply are the perfect recipe for price appreciation.

In September 84% of builders raised prices MOM.

8% YOY price appreciation doubles the 4% of one year ago.

Buyer Segments

The entry-level niche was the first to show its strength and continues to generate the highest sales rates and strongest YOY price appreciation.

Next the move-up market began to soar, led by buyers seeking more space in their homes, their yards, and their neighborhoods.

Then the luxury and 2nd-home markets started to surge as the stock market improved and mortgage rates remained low.

Sales to the active adult buyer were the last to recover. The 55+ sector is finally matching pre-COVID volumes. However, active adult sales are not escalating past pre-COVID volumes like other buyer segments.

Production builders interested in participating on a confidential basis in our monthly survey, in exchange for the survey results, may contact Jody Kahn or Devyn Bachman for more information.