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The real estate buying frenzy is over

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Source: FactSet; Chart: Axios Visuals
Source: FactSet; Chart: Axios Visuals

The fuss about buying a home in the United States seems to be coming to an end. There is a visible change in atmosphere in both official data and anecdata from sellers, buyers and brokers.

Important reason: This was ordered by Jerome Powell. The slowdown means that the Fed’s rate hikes are working — cooling demand in overheated markets.

“Buyers stopped buying” Until recently, Redfin’s agent Shauna Pendleton in Boise, Idaho Hottest market domestic. As she called it, “California” was filled with cash thanks to the once booming stock market, driving an influx of buyers from the West Coast.

  • She said some lists have now been hidden for weeks.like this 4-bedroom price is $ 899,00042 days not seen-see.
  • In Dallas / Fort. Robin Glaysher, a Redfin agent in a valuable area, said five people appeared in the open house last weekend. Previously, there would have been a line outside the door.
  • “It’s a completely different market now,” said Glaysher, who sells homes for about $ 400,000.
  • She said this change would be a boon to some buyers, such as buyers who rely on FHA loans that only require a 3.5% down. In the old days, they were often overpriced by cash buyers, but now they are gone.

News promotion: New home sales plummeted in April, down 16.6% from March to 591,000, well below economists’ forecast of 750,000, according to Tuesday’s data. This is the slowest pace since April 2020, when the economy froze for a minute before the boom began.

  • Existing home sales — probably a better measure of the US market because it’s a much larger segment — DowntrendAccording to the National Association of Real Estate Agents, it has fallen for three consecutive months.
  • Mortgage rates have skyrocketed since March and have been around 5.25% for 30 years, a record high.
  • Meanwhile, new housing supplies are being built. The available inventory of new unsold single-family homes increased 8% in April to 444,000, the highest level in 13 years.
Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

Catch up quickly: Technically speaking, the real estate market has been a banana since COVID, and the rise of remote work and ultra-low mortgage rates have increased the number of people seeking to upgrade their living spaces.

  • The surge in demand has fueled bidding wars and wild activities of all kinds. For example, the buyer abandoned the inspection or asked the seller for the inspection.
  • “As long as you give the seller whatever you want, the buyer has few reconciliations,” said Glacier, a Texas agent.

What they are saying: “The party is over,” Ian Shepherdson, chief economist at Pantheon Macroenomics, wrote in a study note on Tuesday.

  • “We traveled 90 miles per hour on the freeway and took our foot off the gas,” Michael Simonsen, CEO of real estate analytics firm Altos, told Axios.
  • “The market has moved from’irrational’to more rational,” New York-based real estate appraiser Jonathan Miller told Axios in an email. What used to sell in 24 hours can now take about a month.

Yes, but: This is not 2008. House prices haven’t started to fall. Median new home prices in the United States rose to $ 450,600 in April. This is a 45% increase from two years ago.

  • And while the supply of new homes is increasing, it’s actually a small part of the overall market.Existing homes are still in stock Some of the worst on recordAs of April.

Conclusion: The enthusiasm is over, but “there is still a lot of demand from people who have been shopping for a year,” Simonsen said.

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