Home Values Slightly Higher as Summer Winds Down
Home Values Slightly Higher as Summer Winds Down Typical home values climbed slightly in August, while a healthy crop of new listings finally brought a few more options for home shoppers The typical U.S. home value climbed 0.2% from July to August – a marked cooldown after red-hot monthly appreciation in the previous three months. The nation’s typical home value has reached another all-time high, and stands 1.3% higher than last August. After housing market demand and activity peaked for the year in May and June, conditions have loosened in the later phase of summer. Not only did price growth decelerate, but closed-sales data from July showed fewer homes selling above their list price (40.4%, vs. 41.5% in June). Listing data in August showed a continued rise in the share of listings with price cuts, up to 23.4% (vs. 21.8% in July), while listings in August took 13 days to go pending (vs. 12 in July, but vs. 15 days a year ago). Sales activity stepped down as well: there were 18.9% fewer newly pending listings in August than last year, v.s a 14.5% year-over-year dip in July. Maybe most importantly for market watchers: New listings actually increased a little (4.0%) from July to August, registering a mere 12.7% year-over-year decline vs. a 25.6% year-over-year decline in July. This unusual late-summer boost to supply should help to ease market conditions even more than the seasonal cooldown expected at this time of year. Total inventory remains low, but it bears watching to see if this marks the start of some modest relief for the bone-dry listings drought that began in earnest in July 2022. Most of the 50 largest metropolitan areas now have higher home values than this time last year, although several saw month-over-month declines in August. Home values climbed, month-over-month, in 32 of the 50 largest metro areas in August, led by Hartford (1.3%), Buffalo (1.0%), San Diego (0.9%), Cleveland (0.7%), and Providence (0.7%). Home values fell, on a monthly basis, in 12 major metro areas, with the largest monthly dips in New Orleans (-1.4%), Austin (-1.0%), San Antonio (-0.4%), Denver (-0.2%), and Dallas (-0.2%). Home values are up from year-ago levels in over half (29) of the 50 largest metro areas. Annual price gains are highest in Hartford (9.9%), Milwaukee (8.1%), Virginia Beach (5.7%), Philadelphia (5.5%), and Providence (5.3%). Home values are still down from year-ago levels in 21 major metro areas, with the largest drops in Austin (-11.4%), New Orleans (-8.7%), Phoenix (-6.4%), Las Vegas (-6.4%), and San Francisco (-4.2%). New listings took an unusual late-summer step up from July’s level; inventory inched up too. New listings climbed 4.0% month-over-month from July to August. There were 12.7% fewer new listings this August than last year, vs. a decline of 25.6% year-over-year in July. Inventory (the number of listings active at any time during the month) in August climbed 2.2% from July. There were 13.9% fewer ever-active listings in August than last year, vs. a decline of 14.7% in July. Newly pending listings continued to slide from the seasonal peak in May, and took somewhat longer to sell. Newly pending listings declined 1.2% in August from July, after a 6.5% decline in July. Newly pending listings were down 18.9% from last year (vs a year-over-year decline of 14.5% in July). Median days to pending climbed to 13 days, from 12 days in July. Median days to pending fell from 15 last August; that is the first year-over-year decline in median days to pending since April 2022. Rents are climbing slowly now. Asking rents climbed 0.3% month-over-month in August, slightly faster than the pre-pandemic average pace for this time of year (0.2%), but slower than last August, or August 2021. Rents are now only 3.3% higher than in August of last year – a slower year-over-year growth rate than observed in 2019 (4.0% full-year rent growth) or 2018 (4.2%). On the whole, rental market trends seem to be returning to normal, and August continued the normal seasonal trend of cooler growth in the second half of the year. Jeff Tucker• SEP 12 2023
What happens when the mortgage rates fall?
The interest rate on a 30-year loan has averaged above 7% for four consecutive weeks. It’ll have to come down significantly for most prospective buyers to return to the market, a new survey shows. Photo by Aziz Acharki on Unsplash The magic number for home buyers may be 5.5%. That’s the mortgage rate threshold at which many would-be buyers would jump back into the market, according to a survey from John Burns Research and Consulting. Seventy-one percent of prospective home buyers say they won’t accept a rate on a 30-year mortgage above 5.5%, the survey shows. But it may be a while before rates fall to that point. While the interest rate on the 30-year loan eased to 7.12% this week, it has averaged above 7% for four consecutive weeks, Freddie Mac reports. Higher rates are having a so-called “golden handcuff effect,” discouraging homeowners who locked in low rates a few years ago from selling. This has created an inventory logjam in the housing market. Nearly 82% of home buyers say they feel “locked in” by their existing low-rate mortgage, according to a separate survey from realtor.com®. The inventory crisis, however, has fueled housing competition in spite of higher mortgage rates. Thirty-five percent of homes are fetching more than their asking price due to a limited number of homes on the market, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. The typical seller is still receiving three offers on their property. “The economy remains buoyant, which is encouraging for consumers,” adds Sam Khater, Freddie Mac’s chief economist. “But while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates, which, in the face of affordability challenges, are straining potential home buyers.” Buyers are being forced to revisit what they can afford. At this week’s 7.12% mortgage rate, a loan for a typical single-family existing home costs $2,221 a month and $1,926 a month for condo buyers, Lautz says. The mortgage payment for a $400,000 home today compared to a year ago is about $259 more per month, Lautz says. Freddie Mac reports the following nationwide averages with mortgage rates for the week ending Sept. 7: 30-year fixed-rate mortgages: averaged 7.12%, dropping from last week’s 7.18% average. A year ago, 30-year rates averaged 5.89%. 15-year fixed-rate mortgages: averaged 6.52%, falling from last week’s 6.55% average. A year ago, 15-year rates averaged 5.16%. When is the best time to buy or sell? The answer is ALWAYS when YOU are ready! Buying now will keep some of the competition on the sidelines. Waiting for rates to improve will likely result in chaos as there will be many more buyers that can afford homes at lower rates. Selling now still allows you to receive TOP DOLLAR as we are still in a seller's market with historically high home values maintained due to the lack of inventory. There is a little volatility with the higher rates pushing some buyers out, so you may be waiting a little longer to capture that deal! Have more questions? Contact me at brian.leneweaver@cbrealty.com or by phone/text at (612) 208-3859. By: Melissa Dittmann Tracey Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, editor of the Styled, Staged & Sold blog, and produces a segment called "Hot or Not?(link is external)" in home design that airs on NAR’s Real Estate Today radio show. Follow Melissa on Instagram and Twitter at @housingmuse.
Interest Rates Hit 22-Year Highs
Rates on the rise As interest rates hit 22-year highs, it comes as no surprise that the real estate market is feeling the impact. In recent weeks, we have seen an increase in mortgage rates, which has resulted in a spike in monthly payments for buyers. This has caused concerns amongst some home buyers who are now finding it difficult to afford the properties they had their eyes on just a few months ago. For many buyers, monthly payments have increased beyond $2,000 or more. This is a significant increase and has caused many to reconsider their options. Some buyers have been left with no other choice but to look for more affordable properties in different areas. The impact of these interest rate hikes has also been felt by mortgage lenders. With higher interest rates, more people are finding it difficult to qualify for a mortgage. This has made it harder for buyers to secure a loan, which has slowed down the real estate market in some areas. However, not all is lost for buyers. While interest rates have increased, they are still relatively low when compared to past rates. Therefore, it is still possible for buyers to find a suitable property that fits within their budget. It is essential that buyers take the time to research their options thoroughly and work with a reputable real estate agent who can guide them through the buying process. Despite the increase in interest rates, the real estate market continues to be robust. There are still many opportunities for buyers to invest in properties that can provide them with a good return on investment. As we move into the summer months, we expect to see a surge in real estate activity. In the coming months, we also expect to see some changes in the real estate market. As the economy continues to recover, we may see interest rates stabilize or even decrease. This could result in more people entering the market, which could lead to an increase in property values. In conclusion, while interest rates have hit 22-year highs, there are still plenty of opportunities for buyers to invest in the real estate market. By working with a reputable real estate agent and doing their research, buyers can find a property that fits within their budget. It is essential that buyers remain patient and keep an eye on the market as it continues to evolve. With the right strategy, buyers can still achieve their real estate goals and reap the benefits of property ownership.
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