Home News Confused about the housing market? Here’s what’s happening

Confused about the housing market? Here’s what’s happening

by admin
0 comment

A “For Sale” sign outside a New York home.

Shannon Stapleton | Reuters

The bright red housing boom slowed down surprisingly quickly.

The U.S. housing market surged during the pandemic as record-low interest rates boosted and homebound people sought new places to live.

Buyers are queuing outside the open house, and a real estate agent who once reported bidding wars on the back deck said homes are now sitting longer, forcing sellers to lower their sights. I’m here.

This has caused both potential buyers and sellers to question their standing.

Daniel Hale, chief economist at Realtor.com, said: “As recession concerns weigh heavily on consumer outlook, the survey shows that uncertainty is on the minds of many buyers.

Key factors behind the turbulent housing market are:

mortgage interest rate

The main factor behind the slowdown is rising mortgage rates. The average interest rate for a 30-year fixed mortgage is currently the most popular product, accounting for over 90% of all mortgage applications, but he started the year at around 3%. He’s now just over 6%, according to the Mortgage News Daily.

So if you buy a $400,000 home, your monthly payments will be about $700 more than you did in January.

high price, low supply

Other factors for the slowdown are high prices and low supply.

Prices are now 43% higher than when the coronavirus pandemic began, according to the S&P Case-Shiller National Home Price Index. According to Realtor.com, the supply of homes for sale is on the rise, up 27% at the beginning of September compared to the same period last year. While that comparison seems large, it is still not enough to offset the long-standing shortage of homes for sale.

Active inventory is 43% lower than in 2019. New listings at the end of September also saw him down 6%.

Paul Legere is a buyer’s agent for the Joel Nelson Group in Washington, DC. Focusing on the highly competitive Capitol Hill district, he said the list saw him jump from 20 to 171 shortly after his day at Labor. He now calls the market “bloated.” By comparison, only 65 units were offered for sale in March.

“This is a very traditional post-Labor Day stock run, and in a week or so it’s going to be very important how the market absorbs the new stock.” “

Inventories are taking a hit nationwide as home builders slow production as fewer potential buyers see the models. It decreased by 18.5% in July compared to July 2007.

Homebuilder sentiment in the single-family home market It fell into negative territory in August for the first time since a brief dip at the start of the pandemic, according to the National Association of Home Builders. Builders reported declining sales and less buyer traffic.

“Tighter monetary policy by the Federal Reserve and continued rising construction costs have led to a housing recession,” NAHB chief economist Robert Dietz said in an August report.

some buyers are hanging out

However, despite the still expensive sales market and equally expensive rental market, buyers have not completely disappeared.

“Data shows that some homebuyers are finding hope in the form of less competition for more housing options on sale,” said Hale of Realtor.com. “Especially for buyers who are getting creative, such as exploring smaller markets, the chances of finding a home on a budget can be relatively high this fall.”

house prices finally started to coolIt fell 0.77% from June to July, according to Black Knight, a mortgage technology and data provider.

The drop may seem small, but it’s the biggest one-month price drop since January 2011. Also, his July performance dating back to 1991 is his second worst after his July 2010 drop of 0.9% during the Great Recession.

affordability issue

Still, this price drop will do little to ameliorate the affordability crisis brought on by higher mortgage rates. Interest rates fell slightly in August, but have surged again this week, making it the most affordable week for home prices in 35 years.

Currently, monthly principal and interest payments for a median home with a 30-year mortgage and down 20% require 35.51% of the median income. According to Andy Walden, vice president of corporate research and strategy at Black Knight, this was his highest level in 35 years since his June pay-to-income ratio reached 35.49%. slightly rising.

For five years before interest rates started rising, its income-to-payments ratio remained stable at around 20%. Home prices have skyrocketed in he 2020 and 2021, but record-low interest rates offset the rise.

“Given that affordability issues appear to be playing a major role in changing the dynamics of the housing market, the recent decline in home prices is likely to continue,” Walden said. rice field.

Housing market slows as mortgage rates hit 6.25%

Homebuyer demand picked up a bit in August, but a recent rise in mortgage rates over the past week has put homebuyer demand to sleep again, according to a new report from real estate broker Redfin. . The report shows that in the week ending Sept. 3, the number of people he searched for “homes for sale” on Google declined, down 25% year-over-year.

Redfin’s Demand Index, which measures requests from Redfin agents for home tours and other home-buying services, showed demand increased 18% from its 2022 low in June in the seven days to Sept. A year that still showed an 11% decline from the previous year.

“The housing market is always cold at this time of year, but we expect this year to be even weaker than usual, with a particularly cold fall and winter,” said Darryl Fairweather, chief economist at Redfin.

You may also like