- November 29, 2023
- Posted by: Dre B.
- Categories: Posts, Property Records, Public Property Records, Real Estate, Real Estate Post, Title Reports
What are homebuyers doing to take advantage of low housing prices?
Homebuyers are reluctant to sell their properties due to increased mortgage rates and a bigger pool of sellers than buyers. In conclusion, it is a terrible time to sell your house or property, there are ways to take advantage of this market. Individuals and investors are investing in these low-priced homes, the reason is so they can refinance or renovate their homes to use as investment properties and sell them when rates are low. Typically it will sell for much more than the initial cost of the property or home.
The state of the Housing Market in 2023
According to Harvard University’s Joint Center for Housing Studies, Harvard found that the Housing Market in 2023 paints a picture of record unaffordability, near-record housing shortages, and major barriers to first-time homeownership.
Here is a direct quote from “The State of the Nation’s Housing 2023” By Harvard University
“Housing markets continue to cool even as homeowners and renters face higher costs. On the for-sale side, home sales and construction levels are declining, as is the pace of home price appreciation, while rental markets are experiencing sharply reduced rent growth and rising vacancy rates. Nevertheless,
home prices and rents remain elevated from pre-pandemic levels. Millions of households are now priced out of homeownership, grappling with housing cost burdens, or lacking shelter altogether, including a disproportionate share of people of color, increasing the need for policies to address the national housing
shortfall at the root of the affordability crisis. Likewise, there is growing urgency for public and private investment to address longstanding disinvestment in underserved communities of color, adapt the housing stock to increasing risks of climate change, and expand options for older adults to age safely in their communities.”
Homeownership costs skyrocketed in 2022, pricing out 2.4 million renters
According to Harvard’s JCHS, the estimated housing payments — including mortgage, insurance, and property tax — needed to purchase a median-priced home in the U.S. reached $3,000 per month in March 2023, pricing out 2.4 million more renters from homebuying than last year. This included a disproportionate share of Black and Hispanic homebuyers. The estimated annual income needed to afford median homeownership costs rose 20% to $117,000 — well above the national median income for renters. With more renters on the market, we are seeing fewer home buyers in today’s market.
Median home prices dropped slightly between early 2022 and early 2023, but this was more than outweighed by rising interest rates, which increased by more than half. As overall homeownership costs rose, first-time homebuying took a sizable hit. The number of first-time homebuyers starting a mortgage in 2022 declined 22% from the previous year, including a drop of 40% between the fourth quarters of 2022 and 2021. These are all clear signs that we are in a seller’s market, and therefore there is little room for sellers to get the money they originally wanted.
Predictions for the Housing Market in 2024
With mortgage rates and home prices both historically high and inventory very tight. Many prospective sellers and hopeful buyers are feeling nervous about today’s housing market.
The median sale price for an existing home in the U.S. was a hefty $394,300 as of September 2023, the third month of year-over-year price increases in a row. And as of early November, the average 30-year mortgage rate was 7.69 percent — thankfully no longer above 8 percent, but still hovering around 20-year highs.
What will happen to the housing market in 2024?
Rates roughly doubled in 2022, thanks in part to the Federal Reserve’s war on inflation, and have stayed high since. While the Fed does not directly set mortgage rates, mortgage lenders take cues from them. Mortgage rates climbed in tandem with the Fed’s long string of rate hikes.
The Fed’s war on inflation could end soon, but many predict that buyers will still be feeling the squeeze in 2024. “As long as the economy continues to motor along, the new normal of higher rates is here to stay,” says Greg McBride, CFA, chief financial analyst for Bankrate. “A sharp economic slowdown would bring mortgage rates materially lower, but be careful what you wish for. Home price appreciation will be quite modest, at a low- to mid-single digit pace in most areas of the country.”
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