The very first “Star Wars” movie came out in 1977. I was 3 years old. That essentially means I’ve never known life without Luke Skywalker, Darth Vader or The Force.
I can do a killer Yoda impression with my voice. (True, it is) and I can hardly keep myself from going up to every box fan I see and droning into it, “Luuuuuke…...I am your father, Luuuuuuke.” When my boys and I are loading something heavy into the pickup truck, I’ll say “Use the force, boys.”
So, when Lawrence Yun, chief economist for the National Association of Realtors, says that “we need equilibrium” in the housing market, what I hear is that we need balance in the force.
Despite a pandemic, the national housing market continues to set records. Back in August sales for existing and new homes hit their highest since 2006 with six million existing homes being sold and oner million new construction, according to Yun.
Notice the imbalance in the Force?
New construction will always lag behind existing home sales because of commonsensical reasons: it takes much longer to build a home to sell than it does to remodel a home to sell.
But one reason new construction still lags behind old construction has to do with the Great Recession of 2008. The home sales record of August 2020 broke the record set in 2006. Back then the housing market was red hot and there was a builder on every corner. Until the housing crash hit in 2008 and suddenly, like Obi-Wan when Vader’s light saber sliced through him, there wasn’t anymore.
There was a great disturbance in the Force back then and its spirit can still faintly be seen today.
There has been a dramatic under-construction effect for almost a decade and now the inventory is simply low.
Combine this low supply with record low mortgage rates (they hover around 3% daily) and we have high demand. And to be honest it frustrates many homebuyers with whom I work. We are putting in multiple offers on properties and swinging the light sabre a lot of times before we do any damage.
I spend much of my time sounding like Yoda when he was training Luke. “Patience, you must have, Young Homebuyers. Patience,” I whisper.
This imbalance in the Force — low supply and high demand — is causing home prices to go up way faster than incomes are rising. This is shutting out many first-time home buyers and forcing them to stay in rental situations.
This is unfortunate for two reasons: Many potential buyers are in better situations to buy than they realize through no money down USDA and THDA loans and are not acting now; and many of Lebanon natives are having to leave the hometown they love because they cannot afford to buy and live here.
There doesn’t seem to be any middle ground — or equilibrium as Yun the economist says.
How do we find balance in the frenzied real estate market of Middle Tennessee?
We need more inventory and that means building more single-family homes. We need more incentives from local governments that encourage dirt to be used for homes instead of apartments if we want prices to stabilize and our locals to stay locals.
Only then will we find balance in the force.
Build or build not. There is no try.
Jason Goolesby is a licensed agent with Blackwell Realty and Auction. He can be reached anytime by phone or text at 615-784-8687 or at email@example.com.