The villa buying enthusiasm witnessed during the pandemic has largely ended as rising house prices rapidly cool demand.
According to a recent analysis by real estate agents, villa demand fell for the second straight month in March, and second-house mortgage rates fell to their lowest levels since May 2020. Redfin.. Demand increased 13% from the levels seen before the outbreak of the pandemic, but far from the March 2021 peak when activity was 88% higher than pre-pandemic levels.
The slowdown in demand has highlighted the severe consequences of soaring home prices, and the historically rapid rise in mortgage rates has been taken into account by buyers.
“The pandemic’s surge in villa sales ends with mortgage rates rising at the fastest pace in history and second-home buyers retreating,” said Taylormar, Deputy Chief Economist at Redfin. Is approaching. ” “Many prospects rethink when villa prices and prices are soaring and the villa begins to look like a burden rather than a good investment and fun place to take a family over the weekend.”
In the early days of the pandemic, villa sales surged 16.4%, well above the 5.6% increase in total existing home sales in 2020. National Real Estate Agents AssociationAs the state-mandated closures were eased, the pace of sales of escape homes surged further, reaching 57.2% by the end of June 2021.
But that trend is finally reversing.
Demand growth for primary homes has once again outpaced demand for secondary homes for the second straight month, according to Redfin data. As of March, mortgage rate locks on primary homes have risen 34% from pre-pandemic levels. According to the company, demand for primary homes has been largely flat since June 2020, but may change soon.
Overall, soaring borrowing prices and tight inventory levels will ultimately hurt homebuyers, primary homebuyers and villa buyers, and many will withdraw from the once fierce housing market. I have been forced to do so.
“We expect more homebuyers to drop out of the market due to the combination of soaring mortgage rates and record high home prices,” said Darryl Fairweather, chief economist at Redfin. Prepared statementAbout the whole market.
The most common home purchase loan, the 30-year fixed mortgage, has interest rates 5.25% last weekAccording to Freddie Mac, it has risen by more than 2 percentage points since the beginning of the year.
It has skyrocketed monthly mortgage payments. At the beginning of 2022, median payments for homes for sale were less than $ 1,700.It’s now close to $ 2,450, according to Redfin data..
“Second-house investment housing was definitely a point of interest for many, especially those in cities that weren’t ready to move, during the pandemic when interest rates were at record lows,” mortgages said. Robert Heck, Vice President of Markets, said. Morty, Told Yahoo Money. “But a recent change from the Federal Housing Finance Agency in adjusting the price of a second house … has dramatically changed the affordability of a second house.”
Loan fees For second home loans, it increased by about 1% to 4% from April 1st. This change adds about $ 13,500 to the cost of a typical villa buyer buying a $ 400,000 home, and interest in the villa will continue to grow over the next few months. According to Redfin analysts.
“Compared to the number of second houses witnessed last year, at least clearly slower than for our consumers,” Heck said. “The adjustments were aggressive. I think FHFA did a good job in actually moving the needle and not making small changes. You still don’t know how it actually works.”
Gabriella is Yahoo Money’s personal financial reporter. Follow her on her Twitter @__ gabriellacruz..