Recent Report Suggests Housing Change
Realtor.com has recently published a report that details changes coming in the real estate market. It explains why we are seeing the perfect conditions for a seller's market, but that we aren't seeing new homes come on the market. Why is this?
- The June U.S. median listing price was $316,000, up 5.6 percent year-over-year. However, the rate of price growth is now the slowest on record since April 2015.
- Nationally, homes sold in 56 days in June, two days more slowly than last year.
- National inventory grew 2.8 percent year-over-year.
From The Article
While data shows that many people believe now is a good time to sell a home and that this share has increased in the most recent quarter, we have not yet seen this translate into more properties newly available for sale. A multitude of explanations has been offered.
Rate-lock is one likely contributing factor. When a household is rate-locked, it means that they have a lower rate on their existing mortgage than the currently prevailing market rate. For trade-up sellers, in addition to likely paying more money for more space, the cost of any money borrowed will be higher than they are currently paying, and the differential may be too much for many households to make the move. They may choose to stay put and remodel instead. For down-sizers, the savings from downsizing may not match expectations because of higher mortgage rates. In the last eight years, rates have spent half of their time above 3.97 percent- according to weekly data from Freddie Mac- so this phenomenon is likely more common when rates are above 3.97 percent, as they were in most of 2018 and until June this year, versus below that point.
Healthy longevity and aging in place is another likely culprit. As Boomers and older generations live longer, healthier lives, they are choosing to stay in the homes they own, according to research from Freddie Mac. In addition, a previous realtor.com survey indicated buyers didn’t plan to sell their homes because their current home fits their needs.