(Illustration by The Epoch Times, Shutterstock)
Posted on 07/15/2024 5:02:54 PM PDT by SeekAndFind
As the seller’s market persists throughout most of the United States, prices continue to rise and affordable housing appears to be slipping through the fingers of the average American.
(Illustration by The Epoch Times, Shutterstock)
The National Association of Realtors (NAR) reported the highest ever national median sales price of $419,300 for a single-family home in May.
“We’re actually forecasting that home prices will continue to grow based on the lack of inventory and demand for home ownership,” Jessica Lautz, NAR deputy chief economist and vice president of research, told The Epoch Times.
A $400,000 price tag translates to a $40,000 down payment—with the usual requirement of 10 percent of the home cost.
“That’s a lot of money for first-time homebuyers, which means sometimes they may have to borrow from parents or friends to make it happen,” Ms. Lautz said.
NAR reported that May’s existing home sales dropped 2.8 percent from one year ago while inventory of unsold existing homes grew 6.7 percent from the previous month.
In addition, 30 percent of homes sold garnered over-asking prices and bidding wars persist, with properties typically receiving three offers.
Only the Midwest saw a slight uptick in home sales in May with a 1 percent increase from one year ago. The Midwest also had the lowest median sales price of $317,100—a 6 percent increase over last year.
Existing home sales in the Northeast saw the biggest decline at 4 percent from May 2023. The median sales price rose to $479,200, up 9.2 percent from last year.
Home sales in both the South and West declined by 1.6 percent and 1.3 percent, respectively. Median sales prices in the South were up 3.6 percent over last year to $375,300, while those in the West experienced a 5.5 percent hike from 2023 to a median of $632,900.
First-time homebuyers are waiting longer to purchase homes. Last year the median age for these buyers was 35. Some of them are still waiting for either prices or mortgage rates to fall, but Ms. Lautz believes rates may stay between 6–7 percent through the end of the year.
According to Freddie Mac, the current 30-year fixed rate mortgage stands at or about 6.95 percent.
“If mortgage rates did come down significantly, that could also create more bidding wars as more buyers enter the market,” said Ms. Lautz. “I think those 2–3 percent rates were a once-in-a-lifetime experience, and I would not expect to see that again anytime soon. But if you look at rates historically, we are still at the low end.”
Many of those who are selling their homes are making their next purchase with all cash. In fact, noted the NAR, last month 28 percent of all homebuyers did not take a mortgage.
Dutch Mendenhall, founder of RAD Diversified, a real estate investment trust based in Tampa, Florida, also believes home prices will remain stable, given the current market.
“I don’t believe home prices are eventually going to take a large drop like they did in 2008,” he told The Epoch Times. “We have a lot more regulation now and a lot less loose lending. I don’t think we’re going to see any market crash or slowdown.”
Echoing Ms. Lautz’s concerns, Mr. Mendenhall notes the shortfall in new construction is also contributing to the lack of inventory, which in turn, keeps home prices moving forward.
“Higher interest rates also affect construction loans, and a lot of builders just can’t afford to take on large residential development projects,” he said. “New developments don’t drive home prices up—they create more affordable housing.”
While escalating home costs and interest rates are resulting in homebuyers paying twice as much as they paid two years ago, people are still buying homes.
“The most common forms of home buying are couples who have started a family, and retirees who are downsizing or moving to a new location,” he said.
“Sales have definitely been slower during the first half of this year, but I do think the real estate market will start to move forward, as we move toward 2025.”
Matt Willer, managing director and partner at Phoenix Capital Group Holdings, LLC in Denver, Colorado, also agrees that a “bursting bubble” is unlikely, even in this tight real estate market.
“I think we may eventually see a modest softening in some markets, and in others maybe not at all,” he told The Epoch Times.
Right now, Mr. Willer said, it’s all about affordability. “People got spoiled with 3–4 percent interest rates, and the mindset now is that those who don’t want to sell and repurchase with a higher interest rate are staying put and upgrading the home they have.”
Mr. Willer believes interest rates are probably going to stay in that 6–7 percent range for the remainder of 2024 and possibly into early 2025. “I don’t think anything of substance is going to happen prior to the election, and we could see a negligible drop towards the end of the year,” he said.
Addressing the home shortage, Mr. Willer contends the building industry is cyclical, but builders are also wary of the amount of debt they carry and may not want to overextend their budgets. “I don’t see a way we can get ahead of that right now,” he noted.
Meanwhile, the rental market is booming in many cities, as many potential homebuyers are playing the waiting game before jumping into home ownership.
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1) Enforce the law vigorously against companies that hire illegals.
2) cut off any public assistance to illegals
3) Announce a policy that if you come to the authorities you will be deported and it won’t count against you BUT if you do not, and we have to spend resources tracking you down, you will be forever barred re-entry to the United States. You can never become legal here.
From your lips to god's ears. I hope we have a correction like that in the Housing market. I simply refuse to pay these prices. They are outrageous.
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