Due to the high interest rates on mortgages,is already difficult to buy affordable homes Work is underwayThis spring is even tougher for many Americans.
In metropolitan areas such as Denver, buyers rush to close deals before mortgage rates get too high. In Dallas, some people accept longer commute to find a home that they can afford. Also, in places like Los Angeles, where the number of homes has dropped significantly from a year ago, sellers regularly receive multiple offers.
Although historically still low, long-term mortgage rates have risen most of the year. The average weekly rate for 30-year fixed-rate mortgages rose to 4.42 percent last week. It was 3.95 percent earlier this year.
With just 0.5 percentage points added, monthly payments increase and interest of tens of thousands of dollars is earned during the life of a regular 30-year loan. May be added. When home prices are rising faster than income in many parts of the country, it may be enough to keep out some potential buyers who earn a median income in cities such as Seattle and Los Angeles.
Beginner homes have already faced major hurdles to home ownership, as the market has seen the sharpest price increases and sharp declines in home numbers. Higher mortgage rates only further limit what buyers can pay.
In the US housing market this year, economists predict that US home sales will be flat or slightly higher than 2017, coupled with lower inventories, higher prices and higher mortgage rates. And housing specialists. ..
"We've been talking about low inventories for a few years now, but inventories continue to decline," said Daniel Hale, Chief Economist at Realtor.com. "This puts us in a position to be the most competitive market for home shoppers this spring in the last few years."
Chad Zolman was looking for a home in Denver. I knew the taste. The account manager has made 11 offers since he started the search in September, but lost to rivals who offer more money. As mortgage rates began to rise, Zolman's anxiety about whether he could afford to buy also increased.
"Interest rates continue to rise, and the more interest rates continue to rise, the fewer homes you can buy," said 41-year-old Zolman. .. You must be able to turn cash into a pony.
Zolman finally bought a newly built three-bedroom town home for $ 370,000. He received approval for a 30-year fixed rate loan of just under 4.7%. But he is still unclear. He will not be able to fix his rate until mid-May within the 120-day window before the construction of the house is completed.
And if the price is high by then.
"That's what it is," Zolman said. "You have to pay for it."
For others, rising mortgage rates (March 30-year interest rates reached a four-year high of 4.46%) Makes it difficult to close the widening gap between home prices and income. Cities such as Denver, Los Angeles, Miami, and Seattle are becoming more and more affordable, especially for millennials and others looking to buy their first home.
Consider that the median home price across the country is $ 225,264. According to the latest US Census annual income and home price data from real estate information firm Attom Data Solutions, this is 3.8 times the average US income of $ 59,039. The same price-to-income ratio was 3.3 in 2000.
The affordable equation is not too daunting for buyers who earn median wages in Pittsburgh. The median income for the metro area is $ 56,063. The same is true for buyers in St. Louis, Oklahoma City, Indianapolis, Baltimore, and other cities where the median home price is less than three times the median income.
By comparison, in some California cities like Los Angeles, the median home price and income gap is wide, with a median home of $ 605,000 being a median income of $ 65,950 in the metropolitan area. It will be more than doubled. Rising home prices have more than quintupled the gap between home prices and income in cities such as Seattle, Denver, Portland, Oregon, Reno and Nevada.
"Looking at Seattle, San Francisco, New York, and the northeastern coastline, there are many first-time homebuyers priced by the market," Nick said. Bailey, CEO of Century 21 Real Estate. "There is a point where the average first-time homebuyer can't compete."
At this point, rising mortgage rates are about 3 of the average homebuyer's monthly payment increase. Rising house prices account for one-third, and rising house prices account for about two-thirds of that increased payment.
"Rising prices have been a much bigger factor, at least so far. And the reason for rising prices is the balance between supply and demand. Inventories are scarce."
The supply of housing for sale in February decreased by 8.1% from the previous year to 1.59 million units. It takes only 3.4 months to surge the supply of available homes at current sales rates. "It's down from an average of six months since 2000," said Nera Richardson, chief economist at real estate.
"Last year was the fastest time we've ever seen in the market. It was the housing market. " Red Fin. She added that homes sold five days earlier than last year.
Many of today's homeowners, who have historically been fixed at low interest rates in recent years, are next doors. This could further reduce the inventory of homes sold nationwide. Buyers can expect prices to continue to rise this year, even if prices do not fluctuate significantly. Buyers far outnumber homes for sale.
A strong employment market has helped many Americans build confidence that it's goo d time to buy a home. Millennials, the largest generation since the baby boomer generation, are reaching the peak age of homebuyers, and the number of buyers is increasing this spring.
“Inventory tightness is there and very serious for first-time buyers,” said Cheryl Young, senior economist at Trulia. "It's definitely a seller's market."
This year's home sales have been uneven so far. According to the National Association of Real Estate Agents, sales of existing homes increased 3% in February to a seasonally adjusted annual rate of 5.54 million. This profit follows the decline in sales in January and December.
Overall, home prices are 6.3% higher than their July 2006 peak. Prices plummeted when the housing bubble burst and bottomed out in February 2012. Since then, prices have recovered 46.5%.
To deal with rising prices in Dallas, first-time buyers like Rob Chilton and his wife expanded their search even with longer commute times
In February, I bought a 3-bedroom, 2-bath fixer upper for $ 335,000 for dining out and other luxuries over the past few years to secure money for a reduced couple down payment. This is $ 15,000 cheaper than the asking price, but $ 45,000 more than the couple felt comfortable buying.
"A house that was comfortable in our price range three or four years ago is now out of our price range," said music teacher Chilton.
The house is also in the suburbs, and Chilton's wife's commute time is an additional 15 minutes longer than the one-hour drive she had previously.
"By moving a little further north, we were able to get a new home in a little better condition at our price point," said Chilton, 33.
In Dallas, like many others, it is common for sellers to receive multiple offers in excess of the asking price in this spring market. James Williams, a broker associate at Berkshire Hathaway HomeServices PenFed Realty, said the homes that recently hit the market for $ 215,000 weren't short of buyers.
"There were 40 shows on the first weekend, 10 offers, and the best offer was $ 15,000, or 7 percent above the list price," Williams said. "There is definitely a shortage of less than $ 300,000 inventories, and it's enthusiastic when those homes hit the market."
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