I figured I would periodically post the overall sentiment I’m seeing in the news and twitterverse on housing. Because my own thoughts are one thing, what the wider landscape says, is another.
Granted, there’s never consensus these days, but here’s a smattering of what I’ve seen.
The Sky-High Pandemic Housing Market Finds Gravity Does Exist
NYT reports that a cooling is starting to happen. They interview a real estate agent in Portland, Ore. who had an unusual weekend. “It was the first time in two years that one of his listings made it to Monday without any offers.”
Essentially, they report that early data is showing a change in the market. “Open houses have thinned. Online searches for homes have dropped.” A homebuilders’ survey from Ivy Zelman reports that “while builders were still seeing strong demand, cancellations had inched up, though still well below historically low levels.”
Mortgage demand falls to nearly half of what it was a year ago, as interest rates continue to rise
CNBC reports that mortgage applications has fallen in the high interest rate environment. They break that out into refinance applications, which “fell another 8% for the week and was 68% lower than the same week one year ago” and purchase applications, which “fell 3% for the week and were 14% lower than the same week one year ago.”
They also note that adjustable-rate mortgages, which were previously seen as too risky, are seeing an uptick. “The ARM share of applications reached 8.5% last week, its highest level since 2019.”
U.S. named the most affordable major country for middle class homebuyers
Fortune, on the other hand, is proud to report that the US is the most affordable major country for middle class homebuyers. Never mind that currently, multiple countries are experiencing never-before-seen unaffordability of housing. And that the US financial and monetary manipulations do indeed have global impact.
Nah, let’s just dwell on the fact that Pittsburgh and Oklahoma city are still affordable.
Existing-Home Sales Slip 2.7% in March
Where better to start with industry sentiment than NAR, the National Association of Realtors. This month, even relentlessly optimistic NAR put out an update that started rather despondently. They noted that existing home sales fell for the second month and the inventory of unsold existing homes increased.
“The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” said Lawrence Yun, NAR’s chief economist. “Still, homes are selling rapidly, and home price gains remain in the double-digits.”
Ah there’s that trademark optimism. Home prices have been continuing to gain, with “121 consecutive months of year-over-year increases, the longest-running streak on record”. However, Yun later notes that “sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside”.
Why homeowners aren’t selling
Axios reports that homeowners aren’t selling because their mortgages are locked in at a low rate. This is a sentiment I see repeated a lot by first time home buyers, I assume because it’s what their realtors are sharing with them.
Nine out of ten mortgages in America carry an interest rate of less than 5%.– Axios
The bottom line: Americans are holding onto their cars for much longer than they normally would because replacing them is so expensive. Something similar is beginning to happen in real estate, too.
Nearly One-Third of Homeowners Have a Mortgage Rate Far Below Today’s Level, Prompting Some to Stay Put
Redfin similarly reports that one-third of homeowners have a mortgage rate below 5%, and strangely, note that they are counting homeowners with no mortgage. Which I assume means people who bought with cash and/or paid off their mortgage. They note the higher rates are contributing to a decline in listings, but also “curbing the insatiable homebuyer demand for those listings”.
Redfin Deputy Chief Economist Taylor Marr said. “That slowdown in demand may cause homes to stay on the market longer, in effect giving buyers more options to choose from. Overall, that could mean housing inventory actually gets better, not worse.”
They go on to mention the ongoing trend where sellers were already staying put because the cost of the replacement home was too high. And a new trend where sellers are selling with more urgency as the threat of lower prices looms.
“Rising rates are always a shock at first, but people still have to move. Some sellers will have to adjust their expectations and understand they may not be able to afford the same house they could have two years ago.”
I have to say, I appreciate Redfin’s recent willingness to research data and present opinions that don’t exactly toe the RE industry line.
Homebuyers ‘should move faster’ amid soaring prices
Speaking of toeing the line, we have Barbara Corcoran, real estate guru and “Shark Tank” panelist. Barbara suggests aspiring homeowners should jump into the market before it’s too late, because “houses are only getting more expensive”.
“It’s harder to get your hands on something that you even find acceptable to live with, never mind something you’ve been dreaming about.”
“There’s nothing to be gained by waiting whatsoever,” she added. “Absolutely nothing.”
You heard it friends, Barbara says buy anything you find acceptable to live in.
Anecdotally, this is what regular folks are saying on reddit, twitter, etc…
“You guys do understand that your typical hoomer has enormous amounts of equity, right? And that even if the market corrects say 10%, hoomers would still have a lot of equity, right? … Hoomers are not going to be ruined if their zestimates go down. Hoomers are not going to panic sell their HOMES.”
– Homeowner talking to those that say there’s a bubble.
“Markets up bigly today. My Zestimate went up a little. Hell, even Lennar stock up big today.”
– Homeowner excited about their Zestimate
“In my area, most homes sell for cash and there are very few available. We aren’t slowing down anytime soon.”
– Homebuyer talking about cash purchases
“it’s almost standard currently. the make or break now is appraisal gaps. we’re waiving everything and consistently going 50-75k over asking but we only can offer about 10k for a gap so, needless to say, we’re still on the market.”
– Homebuyer describing the need to waive contingencies in the offer.
“that [2008 GFC] ain’t happening again. There are regulations in place as a result of 2008. The people buying homes today aren’t getting loans they shouldn’t have qualified for like during the financial crisis.” – Homebuyer
“If multiple people are willing to pay $200K over asking on a “$500K house” then it’s not actually a $500K house. List price means nothing.” – Homebuyer
Exhausted. I am so TIRED OF LOOKING AT HOUSES. I’m tired of all the driving. The urgent nature of it all. I’m TIRED of putting bids on homes where the selling agents/investors are sketchy AF. Where is the human decency in this market?!? – First time home buyer
Disclaimer: I’m an idiot first time home buyer. I’ve never taken an econ class in my life. I’m just sharing what I see and learn as it happens. I am 100% certain I will get things wrong, so don’t take any of this as the golden truth.