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Low inventory, high mortgage rates and high prices have created a difficult housing market.
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Homeowners have seen equity take off, but house hunters have had a hard time getting into the market.
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In the second quarter, real estate investor purchases fell by 45 percent compared to last year.
It’s a tough time to navigate the US housing market.
Low inventory, high mortgage rates, and High prices You put it The housing market is in a state of disparity That weighs on house hunters, current homeowners and even real estate investors.
The Federal Reserve’s high interest rate hikes over the past 18 months have sent mortgage prices soaring to a two-decade high, but so far home prices haven’t slowed as rates have risen.
Distorted supply and demand dynamics and Economists see little reason to expect proportionality to ease.. Current homeowners are reluctant to move and are at risk of giving up the lowest prices they’ve had in the past, and this drives homes off the market and leaves buyers with fewer options.
As things stand, roughly a quarter are homeowners. Settle on a mortgage rate of less than 3%near the highest on record.
High house prices
The Case-Shiller U.S. National Composite Home Price Index rose for the fifth consecutive month in June, and the index now 0.02% below the peak reached last summer. The seasonally adjusted data showed that prices rose in every city in the group’s 20-city index.
S&P DJI Managing Director Craig J. “Over the past 12 months, 10 cities show positive returns. Otherwise, half of the cities in our sample are now sitting at high prices.”
A recent Redfin study found that young adults in particular are experiencing headwinds. Thirty-eight percent of buyers under the age of 30 said they should. Relying on family to help pay the down payment, in cash or in the form of inheritance. The statistic led Redfin Chief Economist Darryl Fairweather to label the group “nepo-homebuyers.”
Until then, they are Americans Struggle with the most expensive starter homes ever. The median sales price for the typical starter home rose $243,000 in June.
Inflation makes it difficult even for those with deep pockets. A separate Redfin report found real estate Investors bought 45% fewer homes in the second quarter Compared to a year ago.
That outpaced the 31% overall decline in home sales, and marked the largest decline since 2008, excluding the first quarter of this year.
“Offers from hedge funds have dried up. I haven’t had one offer in a long time, except for unrealistically low offers,” says Shai Stein, a Las Vegas Redfin agent. “When interest rates started to rise from mid-2020 to early 2022, hedge funds bought tons of properties and immediately converted them to rentals, pricing out local buyers. Now most of our homes are owned by investors, but they haven’t added to their portfolios.”
No relief in sight.
Zillow’s latest forecast says home prices are likely Add another 6.5% in July 2024Data from Realtor.com shows total home listings dropped for the fourth straight month in August. Higher prices will continue.
The report also shows that home sellers were less active in August. Inventory in the largest 50 metros, according to Realtor.com, is 45% below pre-pandemic levels.
Meanwhile, the latest mortgage delinquency data is also indicated Widespread price cuts are not on the horizon.. Fannie Mae reported that delinquencies fell to 0.54% in June from 0.55% in July — the lowest since before the 2008 housing bust and also down from 0.60% before the pandemic.
“Since lending standards have been strong and most homeowners have high equity, there won’t be a big wave of single-family foreclosures,” veteran real estate analyst Bill McBride wrote in an Aug. 28 note. “That means we won’t see price declines like following a housing bubble.”
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