A housing market defined by rapidly rising home prices, bidding wars, a lack of inventory, and sellers with the upper hand in negotiations may be changing. “The signs are pointing to a market that’s shifting toward buyers,” says Danielle Hale, realtor.com®’s chief economist. “But in most places, we’re still a long way from a full reversal.”
After all, home sales aren’t exactly tanking. Prices for existing homes were up 4.6 percent from a year ago in the National Association of REALTORS®’ latest housing report. The median home list price in August was up 7 percent from last year.
While these numbers are still higher than last year, economists point to a slowing growth in the percentage jumps. Last year, median home list prices increased by 10 percent from the previous year and by 9 percent the year before that.
A recent report from real estate brokerage Redfin showed that more than one in four home sellers dropped their asking price last month. The areas seeing some of the biggest decreases this year are Las Vegas; San Jose, Calif.; Seattle; and Atlanta.
“We’ve hit that tipping point in a lot of these cities where what sellers think they can get is just not possible for many buyers,” Daren Blomquist, senior vice president at ATTOM Data Solutions, told realtor.com®. “Now the pendulum is swinging away from sellers and back toward buyers.”
Economists point to housing affordability as a culprit for the slowdown. Mortgage rates are up 0.82 percent since a year ago; the 30-year fixed-rate mortgage averaged 4.65 percent as of Sept. 20. Each percentage point increase in rates can translate to about $143 more on a monthly mortgage payment, or nearly $51,500 over the life of a loan on a $300,000 priced home, according to realtor.com®.
“Home prices have just gone up too fast,” Blomquist says. “It doesn’t mean that all of a sudden it’s a market that’s going to crash. But it does mean there are limits to what people can afford.”
Contract signings rose in all four major regions across the U.S. last month, a sign that dwindling home sales—which have plagued the market at an unusual time of year this summer—will reverse course in the coming months, the National Association of REALTORS® reports.
NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 0.9 percent month over month in June to a reading of 106.9. “After two straight months of declines in pending home sales, home shoppers in a majority of markets had a little more success finding a home to buy last month,” says NAR Chief Economist Lawrence Yun. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates. Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”
Despite last month’s rise, contract signings are still down 2.5 percent compared to a year ago, NAR reports. Nevertheless, Yun says the worst of the supply crunch may now have passed. In June, existing inventory was up slightly on an annual basis, marking the first increase in three years. Several large metros saw year-over-year surges in inventory levels last month:
- Portland, Ore.: +24 percent
- Providence, R.I.: +20 percent
- Seattle: +19 percent
- Nashville, Tenn.: +17 percent
- San Jose, Calif.: +15 percent
“Home price growth remains swift, and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” Yun says. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”
Source: National Association of REALTORS®
Inventory of available homes on the market is the lowest it’s been in two decades, but the reasons may surprise you. Two of the likely culprits are baby boomers and homeowners who are simply satisfied with their home, according to realtor.com®’s Housing Shortage Study.
Baby boomers are showing a desire to age in place in their current homes, and their refusal to sell is creating a clog in the market, according to the study. Eighty-five percent of baby boomers surveyed say they are not planning to sell their home in the next year. That means 33 million properties—many of which are urban condos or suburban single-family homes—will stay off the market. Many of those properties would be popular choices for millennials, a generation still largely waiting in the wings to break into homeownership.
Read the full article on RealtorMag…
By now just about every would-be buyer out there knows there simply aren’t enough homes for sale these days to appease the hordes of competition. But despite the shortages, rising prices, and bidding wars, more homes are expected to be sold this year than in more than a decade.
In 2017, the number of sales of existing homes (which have previously been lived in) is expected to rise about 3.5%, to 5.64 million, according to the midyear forecast from the National Association of Realtors®. The group predicts that existing-home purchases will rise an additional 2.8% in 2018, to 5.8 million.
Read more on Realtor.com…
Consumers are increasingly on the house hunt this spring. Though they’re enjoying solid employment and paycheck gains and in a rush to beat rising mortgage rates, they’re also struggling to find a home to buy in many housing markets.
Indeed, the supply of homes for-sale is at a nearly 20-year low. The most affordable homes—those that tend to attract first-time buyers—are in short supply too. Meanwhile, home prices are rising sharply as buyers find themselves competing for the few homes that are for sale.
Reports are growing of bidding wars erupting across hot markets. About 1.75 million homes were for-sale nationally at the end of February, down 6.4 percent from a year earlier, according to the National Association of REALTORS®. The supply of homes has dropped on an annual basis for the last 21 months.
Why is the supply so low? Housing experts point to several reasons. The average time that owners are staying in their homes before selling has doubled to nearly eight years, according to ATTOM Data Solutions. Investors own a larger portion of houses and they’ve been renting them out. Between 2006 and 2016, the share of single-family houses and condos owned by investors averaged around 30 percent. Also, builders–faced with rising land costs and a shortage or skilled workers–have done little to ramp up new-home supplies.
The shortages are prompting home prices to skyrocket. The median sales price jumped 7.7 percent from a year ago to $228,400—more than double the pace of average pay gains.
Likely to be a hallmark of this year’s spring homeselling season: Bidding wars. As home listings are scarcer and buyer demand remains high, home shoppers are finding a lot more competition this spring, particularly in hot markets like the San Francisco Bay area, Denver, and Boston.
An improving job market, growing consumer confidence, and the threat of rising mortgage rates have Americans flocking to housing. But many markets remain tight for listings. Housing starts remain well below levels prior to the recession and are geared more toward the higher end of the market. Homeowners also are reluctant to sell their existing home because they’re unsure of where they’d move to with the dearth of listings.
Homes are selling at a rapid clip in places like Denver; Seattle; Oakland, Calif.; Grand Rapids, Mich.; Boise, Idaho; Madison, Wis.; and Omaha, Neb., according to the real estate brokerage Redfin.
Read the article…
Many markets are seeing so few new listings that they may not be able to meet the strong buyer demand heading into real estate’s traditionally busiest season. Listings are down more than 7 percent compared to a year ago across the country, according to the latest data by the National Association of REALTORS®.
“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range,” says Lawrence Yun, NAR’s chief economist.
Realtor.com® notes that the following markets are particularly very light on listings:
- Chicago: -13% (active listings compared to a year ago)
- Philadelphia: -14%
- Washington: -15%
- Seattle: -17%
- Minneapolis: -18%
- St. Louis: -12%
- Baltimore: -16%
- Cleveland: -18%
- Orlando, Fla.: -19%
On the other hand, home shoppers may find more choices this year in a few select markets. Notably, Las Vegas is seeing an 18 percent increase in active listings compared to a year ago; Pittsburgh is seeing a 9 percent increase; and Houston and San Antonio are posting a 6 percent increase.