Archives March 2021

Our research team releases regular monthly housing trends reports. These reports break down inventory metrics like the number of active listings and the pace of the market. In light of the ongoing COVID-19 pandemic, we want to give readers more timely weekly updates.  Generally, you can look forward to a Weekly Housing Trends View near the end of each week along with a weekly video update from our economists. Here’s what the housing market looked like over the last week.

Buyers are flooding the housing market early in the year, as they have in the last few years, eager to find a home of their own. With plenty of buyers and not as many sellers, homes are selling fast at prices much higher than this time last year. Seller activity typically picks up as we approach May, and the data suggest this may be ahead, welcome news for homebuyers.

Weekly Housing Trends Key Findings

Key Findings:

• Median listing prices grew at 14.2 percent over last year, notching 31 consecutive weeks of double-digit price growth. The market continues to see home prices soar for two reasons. First, because there are many buyers and few sellers. The way free markets balance scarce supply with high demand is with rising prices. Second, low mortgage rates meant that although the sticker price of homes is much higher, the monthly costs had not risen much, although that is changing as rates rise. The monthly principal and interest payment on the typical listing in January and February 2020 was $1,070 and $1,095, respectively. In 2021, monthly payments were $50 and $100 more, totaling $1,120 and $1,200, respectively. Additionally, although they remain low, mortgage rates have begun to increase and are expected to rise further later in the year, thus affordability will test buyer demand in the months ahead and likely help slow the pace of price growth.  
• New listings–a measure of sellers putting homes up for sale–continue to fall behind the year ago pace, registering 24 percent lower this week. Although they remain below the year ago pace, we saw some week to week growth in the number of sellers that’s typical of this time of year, and we expect more ahead. While competitive conditions have drawn buyers out early in recent years, excepting 2020, the first weeks of May have historically been when we see the biggest numbers of sellers put their homes up for sale. Thanks to the post-holiday COVID surge and severe winter weather, we’re starting the year behind–missing more than 200,000 fresh listings that would typically have come to market in January or February. Put another way, the key weeks for selling activity are still ahead of us and we’ll need to see more new listings growth to see healthy sales activity this spring. 
• Total active inventory continues to decline, dropping 51 percent. Because homes are selling quickly, the total number actively available for sale at any point in time continues to decline. 
• Time on market was 7 days faster than last year.  While COVID adjustments have increased the time it takes to do many things, putting an offer on a home is not one of them. Buyers in today’s market must be prepared to submit an offer fast in order for sellers to consider it.

Data Summary

Recent Weeks:

All Changes year-over-year	First 2 Weeks March 2020	Week ending Feb 27	Week ending Mar 6	Week ending Mar 13
Median Listing Prices	+4.5%	+14.0%	+14.3%	+14.2%
New Listings	+5%	-27%	-27%	-24%
Total Listings	-16%	-50%	-51%	-51%
Time on Market	4 days faster	6 days faster	6 days faster	7 days faster

You can download weekly housing market data from our data page.

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Bitcoin has recently been in the news between its record-setting gains, corporate purchases by companies such as Tesla, and several investment firms discussing its merits. What is Bitcoin, and should you, as an investment real estate owner, sell and buy Bitcoin?

This should no way be construed as investment advice. Bitcoin is a speculative and volatile investment, while selling investment real estate will result in substantial tax ramifications.

What is Bitcoin?

There are mysteries of the founder of Bitcoin, who is said to be Satoshi Nakamoto. No one knows the person or where they may be located. Many believe it is actually a pseudonym of a different person, group of people, or government entity.

Bitcoin is a cryptocurrency, or an electronic version of value, that uses the blockchain to verify and store ownership and transactions. Bitcoin has several merits, such as anonymity and ease of exchange, but can be easily stolen if not stored property and is extremely volatile in price.

In 2011, Bitcoin was around $1.00 per coin. Today it fluctuates in the $50,000 range. If you purchased $1,000 of Bitcoin in 2011, it would have a value of $50,000,000 today.

Selling your investment real estate.

Let’s use the example of a strip center purchased in 2011 for $650,000. This investment could be sold today for $2,000,000. In this example, we are looking at a snapshot in time. In reality, the owner’s income and tax benefits over the last decade will not be addressed in this example.

Knowing all the details is important, so the owner has a loan with a current balance of $500,000. They are in the 15 percent federal and 9.3 percent state tax brackets. The net adjusted basis after capital improvements and accumulated depreciation is $875,000.

Selling would result in total taxes (federal, state, and depreciation recapture) of $245,500, leaving after-tax equity of $1,129,500. This is the cash the owner will pocket after taxes, loan payoff, and sale expenses.

It is all in the timing.

This article intends to compare a proven and solid investment such as commercial real estate to a speculative investment such as Bitcoin. I need to mention there are merits to cryptocurrency as an investment and its use, but Bitcoin may not be the one for you. Other cryptocurrencies have a better use case and may prove to be a better investment.

Purchasing Bitcoin in 2011 had much uncertainty involved. Today, many corporations and institutional investors may make it appear like the go-to investment, but your research is important.

In my example, they essentially doubled their investment in ten years, which is not too bad. Plus, they had income and tax benefits along the way. A 1031 like-kind exchange may have been a better option for the investor as they could essentially have had $1,375,000 to use to acquire another property. Using leverage, this could be an acquisition in the range of $5,500,000.

Commercial real estate is my investment of choice. Still, it is good to have a diversified portfolio, and the right cryptocurrency could prove extremely profitable.

Burt M. Polson is the CEO of ACRESinfo.com, a commercial real estate brokerage company, and CEO of StoneMarkerInvestments.com, a private equity real estate fund. Call him at (707) 254-8000 or email burt@acresinfo.com and burt@stonemarkerinvestments.com.

Should you sell your investment real estate and buy Bitcoin?