The Federal Reserve just announced its largest interest rate increase since 1994 and the move is expected to have a serious impact on the housing market, economists believe.

While the Fed’s key interest rate doesn’t directly affect mortgage rates, it does have a very strong influence on them.

On Wednesday, the Federal Open Market Committee announced it had decided to increase the benchmark funds rate by 0.75% to help rein in inflation that is now at a 40-year high. Banks use the Fed’s rate as their benchmark to charge one another for short-term borrowing. Wednesday’s hike results in a big increase in interest rates, and Lawrence Yun, chief economist of the National Association of Realtors, told CNBC it is likely to be the first of yet more hikes on the way in the coming months.

To date, the Fed funds rate has jumped by 175 basis points this year, resulting in the 30-year fixed-rate mortgage rate increasing even more, by almost 300 basis points. For a $300,000 mortgage, that translates to monthly repayment of $1,800, up from just $1,265 in December.

Yun said it is a “painful” increase and would undoubtedly “shrink the buyer pool”.
As a result, we can expect to see a further slowdown in the housing market, the economist said.

If you recently shared with friends or family that you’re ready to buy your first home, you have no doubt been offered plenty of well-intentioned bits of advice about the process. But be aware: Not everything you’ve heard may be accurate. 

Here are some common misconceptions first-time home buyers may have and the real facts behind them. Remember that every home buyer’s situation is unique, so do what you feel is best for yours.

It’s Cheaper to Rent Than Own

This may be true if you’re planning to rent for a short period of time. But if you’re planning to rent for several years, you might be better off purchasing a home. A fixed-rate mortgage is stable for 15 to 30 years, but rents may increase on average as much as 5% per year. 

Money spent on a mortgage each month is building equity in something you’ll eventually own, and is a foundational means to growing wealth. Consider using a rent vs. buy calculator to run the numbers and see if owning makes better financial sense for you in your area. 

You Need a 20% Down Payment to Get a Mortgage

A 20% down payment will help you avoid paying private mortgage insurance (PMI), but you can secure a conventional mortgage with as little as 3% down. You may be able to put down even less if you qualify for a U.S. Department of Agriculture (USDA) or U.S. Department of Veterans Affairs (VA) loan. Check with your loan officer to see if you qualify for any first-time buyer programs. 

Things to Find Out Before Purchasing Land

Performing due diligence is vital when purchasing a home. It is even more crucial when buying a building lot. Buying land can be an exciting and profitable investment. However, it is important to ask questions and get advice before making a purchase.

Real Estate agents are asked important questions all the time as it pertains to land. Things like how big is an acre or how many square feet are in an acre. While these are basic questions with straightforward answers, the are others that may not be so simple.

We will look at six questions that should be asked when buying land. These are the questions that you should either ask a Realtor or a land owner before making a purchase.

Is The Land Buildable?

The most vital question to get an immediate answer for when buying land is whether it’s buildable. When your intention is to build a home the rest of the questions will become meaningless when the lot you want to purchase can’t be built on.

There are quite a few things that will determine whether you will be able to pull a building permit for house construction. We will cover these things so you’re well prepared to move forward or not.

The real estate brokerages Compass and Redfin have rocked the industry with the news they’re laying off staff amid rising mortgage rates and a decline in home sales.

Compass, in a filing with the Securities and Exchange Commission on Tuesday, said it will cut its workforce by 10%. On the same day, Redfin revealed it will slash its staff count by 8%.

Both companies saw their stock price fall on Tuesday, with Redfin’s shares touching a new 52-week low.

The real estate market, which had been accelerating over the past two years since the COVID-19 pandemic emerged, has suddenly slowed down considerably. Affordability has been crushed by rising mortgage rates and sky-high home prices, which are now up 20% from a year earlier. Home sales have fallen steadily for a number of months and many analysts believe market conditions will worsen before they improve.

Recent data from Mortgage News Daily shows that mortgage demand is now at its lowest level in 20 years. Meanwhile, mortgage rates have shot up, rising from 3.29% at the start of the year to a new high of 6.28% this week, adding several hundred dollars to the cost of mortgage repayments.

Buying a home in today’s competitive market can be a stressful experience, often most similar to the stress of planning a wedding or being fired.

The results of a new Zillow survey published last week show that 50% of home buyers say the process left them in tears, with Gen Zers and millennials — many of whom are first-time home buyers – far more likely to cry at least once during their home-buying journey. More than 65% of Gen Z buyers and 61% of millennial buyers cried at least once when going through the process of purchasing their homes.

It’s no wonder. In today’s low-inventory market, homes are receiving multiple offers and oftentimes selling for over the list price; 60% of sellers report getting at least two offers on their home, and nearly half of all homes sold in the U.S. in April 2022 went for over the asking price, up from 37% a year ago.

Additionally, some buyers planning to finance their purchase with a home loan are losing out to others who are able to pay entirely in cash, which is seen as a more attractive offer to a seller, since they don’t need to worry about the sale falling through in the financing stage. According to Zillow’s survey, nearly 30% of recent buyers said they lost to an all-cash buyer at least once.

“Buying a home is not like buying any other asset; it’s deeply personal and it’s emotional,” said Zillow home trends expert Amanda Pendleton. “When you make an offer on a home, you have likely envisioned your life there. If you lose out on that home to a stronger offer, it can feel like losing a future you have already started planning. These survey results find, even when they are ultimately successful, a large share of buyers in today’s competitive market experience heartache and stress.”

Whether you are a long-term homeowner or only recently closed the deal on your first home purchase, don’t be overly thrilled that home values have been skyrocketing for the last couple of years. Spiking home values are a two-sided coin for homeowners. It’s good for your net worth and gives you more equity to borrow against, but higher home values also mean higher property taxes.

Also, the property tax spike that you saw last year and this year might not be the end of the tax increases even if home values level off in the future. Most property tax authorities are capped on how much they can raise taxes in a single year. The most well-known limitation on property tax increases was California’s 1978 Proposition 13, which restricted the rate of increase on assessments to no greater than 2% each year (until a property is sold). So, if property values spike by 14% in a single year, property taxes could continue increasing for 7 years just to catch up with that one-year spike in home values.

If you experienced sticker shock when this year’s property tax bill arrived, the good news is that property taxes can be appealed. The bad news is that there is limited time to file the appeal in almost every county (typically 30 to 90 days). If you think your home’s assessment is higher than it should be, challenge it immediately. According to the National Taxpayers Union, somewhere between 20% and 40% of appeals are successful. Lowering the assessed value not only means a lower tax bill but also lowers the starting point the next time the county assesses the value. The following steps will show you the way to success.

[A word of caution. The assessed value doesn’t have to go down. There is the chance that the new assessment could value your home higher and your property taxes could increase instead of decrease.]

Step 1. The place to start looking is for if you qualify for a homestead exemption. For instance, when someone in Florida owns property and makes it their permanent residence or the permanent residence of their dependent, the property owner may be eligible to receive a homestead exemption that decreases the property’s taxable value by as much as $50,000. Other tax adjustments are available for owners with disabilities, senior citizens, veterans, active-duty military service members, disabled first responders, and properties with specialized uses. You can contact your county property assessor’s office to request applications and guidelines for any adjustments that might apply.

5 Sustainable Construction Trends That Are Unfolding Right Now

More and more industries are realizing the scope of their impact on the world around us, and they are actively finding new ways to continue their work in a more sustainable and eco-friendly way.

Global organizations are even establishing actionable goals for reducing pollution and greenhouse gas emissions, such is the case with The United Nations Paris Agreement. The construction industry has been particularly affected because it does have a big impact on atmospheric and surface-level production. Luckily, there are some strategies to transform this huge industry into something far more sustainable and eco-friendly. Here are five major sustainable construction trends that are already under way.

Smart cities              

One of the key players in making our daily lives more sustainable is definitely the Internet of Things (IoT) technology which uses sophisticated sensors which can help track data on various things such as resources and even movement. This powerful tool has given rise to a fascinating modern concept of building smart cities, and the name of the game is enhancing efficiency in our day-to-day lives.

Big cities are full of potential for inefficiency because there are many factors that arise in such hectic environments. One of the key solutions to this is minimizing traffic which can easily be done through the successful integration of IoT into driverless and electric vehicles so that they can choose the optimal routes and avoid traffic jams. Using this amazing technology, it is also possible to reduce energy costs from street lighting by using motion sensors to power lighting systems only when truly necessary.

Waste management systems

Australia is making big leaps in terms of creating good waste management solutions with the rate of this market increasing annually by 9%. This shows that there is substantial support for integrating extremely valuable waste management options such as the waste chute from Queensland, which is a great all-in-one integrative tool for recycling and it allows for an intuitive and user-friendly recycling experience. This is especially useful in big corporate environments, so implementing such systems into newly built corporate buildings would go a long way towards a greener future.

Owning and running a storage property means that you cater to a unique clientele. Unlike other real estate businesses, your customers may not necessarily reside or operate full-time from your storage facility. They would come in and go at different times of the day. However, their presence or absence doesn’t negate that you need to maintain a quality and valuable business environment. 

Furthermore, you want your business to portray an attractive outlook to present and potential clients. Thus, it’s vital to keep up with value by adding some techniques to ensure a competitive edge over your competition. For instance, if you have a diverse storage property, like the Safestore Units Auckland, you may want to examine each client group to ensure you can meet their expectations. 

However, regardless of your client composition, listed below were practices that can help you add value to your property. These practices can be a determinant to increasing your customer satisfaction and return on investment. 

One key selling point of your self-storage property is its visual appeal. One of the first tests a potential client does is how your facility looks. Therefore, you should ensure that the grounds and architectural appearance are welcoming and captivating. By taking care of the visible areas, you project to your clients that you care and can take good care of their belongings. 

If you have a site office, it should also carry the same good first impression as the outside appearance. Overall, it would be best to look at landscaping, painting, and lighting. All these add to enhancing the curb appeal of your property. Thus, attracting potential renters. 

America’s biggest private landlords are becoming home builders as demand for single-family home rentals surges ahead of supply.

With more Americans having the flexibility to work from anywhere, there is a growing demand for rentals with more room and spacious outdoor areas. So much demand, in fact, that there simply aren’t enough such homes to go around anymore.

“This market is very undersupplied,” American Homes 4 Rent Chief Executive David Singelyn told CNBC’s Squawk Box.

American Homes 4 Rent has built over 100 rental-only communities in the U.S. in the last five years and it is not alone. One of those communities, in Mooresville, North Carolina, about 30 miles north of Charlotte, includes 220 rental homes with access to amenities such as a pool and a fitness center. Services such as maintenance, landscaping, and gardening are provided for in the rent.

American Homes 4 Rent is one of several major private landlords that’s racing to build more homes, along with firms such as Lennar, DR Horton, Taylore Morrison, and Toll Brothers. Data from the National Association of Home Builders shows that 13,000 new homes were added to the rental market in the first quarter of the year, up 63% from a year ago. Rentals now represent 5% of the new home market, up from 2.7% historically.

Technology allows us to take new approaches to old problems, and these approaches are faster, easier, and yield better results. This is as true in the real estate industry as any other – in a realm where buying and selling homes used to require lots of hard work, innovations like the internet, artificial intelligence, and mobile computing have made the process much less strenuous than it was in the past. 

One of the newest technological breakthroughs, both in the real estate sector and beyond, is the use of artificial intelligence. AI has absolutely revolutionized many processes associated with buying and selling homes, and as a result, first-time home buyers are reaping the benefits in a major way. Let’s take a look at how AI potentially affects first-time home buyers for the better.

Faster, Better, Harder, Stronger

Artificial intelligence might bring up ideas of red-eyed talking computers that try to lock you out of your spaceship and sing Daisy Bell, but the Hollywood version of AI and the real-world application of artificial intelligence are very different. In the context of real estate, AI has been used, quite successfully, to speed up processes that real estate agents, and house hunters, were already doing. The research that goes into finding homes for sale and matching buyers with the right mortgage, for example, are all things that realtors have always done – now, with the aid of Artificial intelligence, they’re getting done quicker than ever. 

A real-world example of this is the well-known real estate site, Zillow. Its Zestimate tool uses artificial intelligence in the form of a complex network of algorithms to track and analyze home values and come up with a likely price estimate. In fact, in 2022 alone, Zillow used the Zestimate neural network to evaluate 100 million homes. Thanks to its newest AI upgrade, the network has one of the most accurate prediction models on the market.

Helping Home Buyers 

But Zillow is just one example of how AI can help make the home buying process easier for everyone involved. Just about every large-scale company in the real estate sector is leveraging artificial intelligence for their own needs, and the proliferation of AI means that this directly helps home buyers. First-time home buyers especially benefit from the sheer power and speed that artificial intelligence brings to the house hunting process since the supply of homes for sale in the United States has made it exceedingly difficult to find the perfect starter home.

TikTok released a new season of its successful “Made for TikTok” talk show which debuted last year with a series led by film director and creator David Ma. 

This year, TikTok creator Shannon Fiedler hosts the show. Made for TikTok aims to help advertisers create TikTok-first strategies to maximize their brand reach and create better TikTok content to engage their audiences. The first episodes are already out and available on the @tiktokforbusiness channel.

As a real estate professional, you may not be yet active on TikTok, which is more of an entertainment channel. But you may want to reconsider your approach and stop ignoring it. 2022: A World Transformed — 6 Mobile Forecasts to Help You Succeed by App Annie suggests that TikTok will surpass 1.5 billion active users globally by 2022. The report also warns:

“TikTok’s global rise could be carving out time away from video streaming providers and attracting significant advertising dollars due to their wide reach and deep user engagement.”

The episodes that have already aired give you valuable advice from content creators who are influential and successful in advertising on TikTok or simply sharing engaging content. 

Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to askbrian@realtybiznews.com.

Question from Darrell in MT: Hi Brian, I became a landlord for the first time eight months ago. It’s your typical single-family home on a typical quarter-acre lot. The house is a little over 20 years old. Before I rented it, I spent a month painting all of the walls and ceilings. I also had new carpeting installed. Other than that, the house was in good shape. All of the appliances worked, the furnace was in good shape, and the plumbing and electrical were just fine. The day after I ran a rental advertisement, I got a call from a man that said he was in a bind and needed to find a place to live fast. He was about to get divorced and his soon-to-be ex-wife had forced him out of the family house. He was living in a rundown motel and was desperate to find a place before he ran out of the little money he still had.

“Bob” met me at the house about an hour later. He was wearing nice clothes and driving a nice car. After a quick walk through the house, he said he would take it and wanted to move in that day so he wouldn’t have to spend another night in the dive motel. Bob offered me the first month’s rent in cash and a check for the deposit. That is when I made what I hope is my last big mistake as a landlord. We filled out the rental agreement and both signed it. I didn’t have him fill out an application, I didn’t do a background check, verify his employment, or check his references. I let Bob move in based on his sob story and appearance. Can you guess where this story is going?

Bob didn’t trash the house or do any serious damage, but his deposit check bounced, and I never saw another dollar from him. Bob wasn’t going through a divorce, instead, he had filed for bankruptcy the week before. His bankruptcy attorney took the position that he was legally not required to pay rent while his case was in bankruptcy court. Bob lived in my rental for seven months before I was able to evict him. I also learned he had pulled similar scams a couple of other times. I hope I learned my lesson and won’t be letting another tenant in without doing a full background check. What I want to know is why tenants always have the upper hand in these situations? Why don’t landlords have more rights since they are the property owner?

Answer: Hello Darrell. That’s a tough lesson to learn from your first tenant but you are not the first landlord to get the short end of the stick. Choosing good tenants is a critical part of protecting your real estate investment. Every landlord should have a rigorous screening process – complete with background checks that ensure that they don’t end up with risky tenants who end up costing them thousands of dollars in evictions, lawsuits, and major property repairs.

Putting up a new office building is often a major challenge that requires a lot of constant attention. Even if you’re having the project entirely handled by a professional construction company – as you should – there are still some things you need to pay attention to yourself. Some of these points will require a significant investment in terms of time and effort. But if you skip them, you may end up having to pay even more down the road when something goes wrong.

Safety Standards

Safety standards aren’t optional. They’re controlled by legislation for a good reason. And yet, there are still various points that entirely come down to your personal choices. Choosing a good 2-hour fire-rated conduit in sensitive areas is a good example of this. It might cost you a bit more than regular versions, but it will make a huge difference if one day you end up needing the extra protection. There are various similar points that mostly come down to your choice. It’s important to take a careful look at your situation and figure out where it’s appropriate to spend more.

Don’t Overexpand

Building a new office is a great opportunity to expand and open up even more physical working spots. You may even be tempted to go beyond your original plans and expand the building a bit more. But be careful – in the end, you’re going to have to make use of all that space, whether you have the appropriate workforce or not. It can actually end up quite expensive to own a huge building that mostly gets unutilized. At that point, you may have to enter into agreements like renting out parts of the building or other similar points you may not be completely comfortable with.

This Is a Long-term Investment

Remember that you’re investing in the future of your company. In that context, it’s okay to spend a bit more on certain aspects of the building if it would mean improving its stability or other features in the long run. Be prepared to extend your budget a bit more beyond what you were originally planning.

There will be various points to align in this regard, so make sure that any compromises you make will not impact your construction project’s long-term viability. This is where it can be extremely useful to have the assistance of a professional construction management company, as it will be able to provide you with a lot of guidance in this regard.

Interest rates have reversed course, with the 30-year fixed-rate mortgage rising to an average of 5.23% following three weeks of declines.

This week’s rate hikes were the result of increased economic activity and incoming inflation data, said Freddie Mac Chief Economist Sam Khater in an interview with RealtorMag

“The housing market is incredibly rate sensitive, so as mortgage rates increase suddenly, demand again is pulling back,” he said. “The material decline in purchase activity combined with the rising supply of homes for sale will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home.”

The bad news is that things are likely to get worse for borrowers before they improve. The Federal Reserve is expected to meet in the coming week and most analysts predict it will once again raise its key benchmark rate.

The National Association of Realtors Senior Economist and Director of Forecasting, Nadia Evangelou, said in a blog post that investors have been concerned about inflation and the impact of the expected half-percentage point rate hike by the Federal Reserve next week. However, she said “the upcoming rate hike will likely have a smaller impact on mortgage rates this time.”

Buyers appear to be gaining more leverage in the housing market following years of almost total control being in the hands of sellers.

There are signs of a softer market emerging. Recent research by Redfin shows there are fewer people searching for “homes for sale” on Google than in previous weeks, while home viewing activity down slightly and mortgage purchase applications are down 14% compared to a year earlier. And even though it’s not that common, some sellers have reportedly been forced to drop their asking prices to sell their homes.

At the same time, home inventories are reportedly improving slights. According to data from realtor.com, active inventory last month rose by 8% compared to a year ago, the first time it has done so by that much in almost three years. That suggests homeowners who’ve been thinking about selling are now looking to do so before any slowdown in the market.

For now though, sellers still have the edge as competition for homes remains tight. Fifty-four percent of homes that went under contract had an accepted offer within the first two weeks of being listed, Redfin reported recently. Thirty-nine percent of homes went under contract within one week of hitting the market.

Home prices are still high. The median national home price climbed to an all-time high in May, reaching $447,000, realtor.com reported.

Did you know that in, April 2022, inflation accelerated at 8.3% higher than in April 2021, so that inflation remained close to 40-year highs? Additionally, core CPI (which excludes energy and food) rose 6.2%, and shelter costs rose at the fastest pace they have since 1991.

If you’re one of the first-time home buyers in the US, you might be feeling stressed about what inflation means for you. How do you know how this will impact buying a new home?

Fortunately, in this article, we’ll review what inflation means for you as a first-time home buyer. Finally, you can understand this economic concept so that you can find the right home for you. Read on to learn more.

What Is Inflation?

Before we review how inflation impacts home buyers buying their first home, we’ll go over what inflation is. This is a process that occurs when prices increase over time. As a consumer, this means that the money you currently possess is worth a little less than when you originally possessed this money.

For this reason, as a consumer, seeing inflation isn’t something you want. However, if you zoom out and look at this in a more macro way, some inflation is a good thing.

Finding your dream house can be an arduous process, but it doesn’t necessarily have to be. Likewise, putting your home up on the market can be nerve-wracking, especially if you’re hoping to get the best price you can. In both situations, one of the best tools out there to connect buyers to sellers is the tried-and-true open house, a traditional approach that’s often led to great results for house hunters and property sellers alike. 

But open houses can be a lot of work, and this goes for not just organizing a home and getting ready to show it but also for buyers to get all the information about a home they’re looking at. That’s why we’ve come up with a great collection of open house tips for both home buyers and home sellers to help you get ready for your own open house.

Open House Tips for Home Buyers

Let’s face it: looking through MLS sites is a great place to start when it comes to a house hunting journey, but even a property with the most attractive listing with dozens of beautiful pictures isn’t going to be enough to convince you whether this property is the one for you. You need to see it in person, walk around the space, and get a feel for the home with you standing inside it – and that’s exactly what an open house offers you the opportunity to experience. That is, of course, if you approach your open houses with the right things in mind.

There are plenty of open houses from which to choose, though, and trying to squeeze in as many as possible is going to just leave you exhausted and unable to make any kind of choices or evaluations. When scheduling open house visits, limit yourself to just one or two a day, make sure they’re all in close proximity to each other, and leave yourself plenty of time to explore each property and ask questions of the real estate agents you meet there. Finally, make sure you spend some time looking learning about the neighborhood itself and finding out information about local school districts. Even if you don’t have kids, this can be a great indicator of the overall quality of the neighborhood.

Open House Tips for Home Sellers

Home sellers have their work cut out for themselves when it comes to staging a property for an open house. You’ve got to ensure that the home looks warm and inviting, isn’t overly cluttered, and, of course, is clean and spotless. If you’ve already moved out, consider investing in a home staging service to dress the property so that prospective house hunters don’t have to imagine what the property would look like with furnishings. Yes, it’s an added expense, but if it helps sell your home faster – and at a higher price – such an investment is obviously worth it.

You might have a job or a business to take care of. Your busy life might not allow visiting your rental property often and ensure its proper management. This can lead to several structural and cosmetic issues in your rental property like cracked ceilings and pest infestation – a big turn-off for potential tenants. This could translate to monetary losses in the long run and followed by frustration.

Property management companies can take care of your rental property as you would, or maybe better. Here are ten reasons why hiring property management companies for your rental property makes sense. 

Wider Tenant Pool 

When you work with a property management company, you have access to their tenant pool. This is in addition to the tenants that might apply when you advertise your rental property independently.

A good management company will screen the tenants thoroughly and pick those likely to take good care of your property and pay rent on time. This gives you peace of mind knowing that your property is in good hands.

Saves You Time

You might have to work long hours or frequently travel for work. This can leave you with very little time to focus on your rental property. A property management company will take care of everything related to your rental property so that you can focus on other important things in your life.

In an effort to remedy America’s great housing shortage, the Department of Housing and Urban Development is launching a new initiative called “Our Way Home” that aims to boost the supply of affordable homes by taking action at a local level.

The idea is to help local communities add more affordable housing while preserving their character, the HUD said. It has proposed a number of ways to do this, including advocating for zoning changes and holding roundtables to discuss possible solutions with local and state-level leaders.

The launch of the program follows a report by the National Association of Realtors last year that found the U.S. has a housing shortfall of approximately 5.5 million homes. The NAR said this housing gap is so large that it will take over a decade to reduce it, even if immediate action is taken. Adding to the problem is the current market conditions, where record-high home prices and low inventory levels is making homeownership virtually unobtainable for many Americans. That’s especially true for minority groups and first-time buyers.

Under the plan, the HUD will take a number of measures to boost the supply of affordable rentals and homes to buy. For instance, it will use federal transportation funds to provide an incentive for local jurisdictions to reduce restrictive zoning laws. It will also support initiatives such as manufactured housing projects, accessory dwelling units and small-scale developments. Further, the plan involves streamlining federal financing and funding sources to lower construction costs and accelerate development.

The HUD said it will bring this plan to life by convening roundtables, listening sessions and peer learning opportunities to connect communities and highlight success stories in communities that have managed to boost affordable housing.

If the price of lumber is a leading indicator, the cost of new home construction might be coming down. Or at least seeing some relief from rising costs. Lumber prices have fallen 47% year to date. But that isn’t the big news. The bigger news is that prices are down 65% from a 2021 record high of $1,733 per thousand board feet. In late May, lumber price futures stood at $651 per thousand board feet.

That is particularly good news at a time when home affordability is the primary challenge to homeownership. Volatile swings in lumber prices over the past year alone have pushed the average price of a new single-family home up more than $18,600, according to the National Association of Homebuilders. At this time, when interest rates of around 5% have become the main obstacle to home ownership, lower lumber prices should help ease inflationary pressures in the housing market.

Better yet, lumber prices are expected to go lower according to experts. A backlog of orders remains and there are still supply chain issues propping up lumber prices. But when these issues are resolved, strong demand for new houses will keep the bottom from falling out of the lumber market. Towards late summer and going into the fall, lumber prices are expected to move lower and stabilize at between $450 to $600 per thousand board feet.

It all comes down to supply and demand. Over the past two years or more, the supply of lumber took multiple major hits. The main four were COVID work stoppages, flooding in lumber-producing British Columbia, a bad wildfire season in the Pacific Northwest, and an overstrained transportation system. The low supply was exasperated by the high demand. The high demand for new housing has been well known for several years. Low-interest rates also brought an avalanche of refinancing activity with high demand for remodeling materials. It was a perfect storm to run up lumber costs.

Rising interest rates are now taking a toll on the demand for lumber. Recent headlines show a slow but steady decline of buyers in the housing market as higher interest adds to the affordability problem. Higher interest also means the refinancing activity has dropped substantially which means much less home remodeling. Now, the fear of a recession slowing the economy is becoming dominant news. It all adds up to a significant decline in demand for lumber while the supply is on the upswing.