Housing Inventory Nationwide Rises for the First Time in Years

5924 SW Cupola Dr, South Beach, OR 97366
Presented by Jack Winter | Offered at $1,049,000 | MLS# 22-1432

From housingwire.com

Fast-rising home prices and interest rates coupled with a slipping economy helped to cool the nation’s housing market in June leading to a nearly 2% increase in the number of homes on the market. That marks the first month since July 2019 (pre-pandemic) that housing inventory increased year over year.

The home-inventory bump dovetails with other data indicating the nation’s housing market lost some steam this past month, according to a June housing-market report from Seattle-based Redfin. The median home-sale price nationwide did rise 11.2% in June, but that’s the smallest year-over-year increase in about two years, the report notes.

San Francisco actually posted a home-price decrease of 0.5%, turning in a $1,581,000 median sale price for June. (North Port, Florida, posted the highest growth in home prices, at 29.7% year over year as of June, to $480,000.)

Home sales for June declined by nearly 16% year over year in June, the Redfin report shows, “the largest decline since May 2020.”

“The country’s economic woes have already cooled the housing market, and they’re likely to continue dampening demand,” said Redfin Chief Economist Daryl Fairweather. “… I advise sellers to commit: If you decide to sell, do it quickly before demand potentially falls further.

“And price carefully. This is not the time to test the waters. You’ll do more harm than good if you overprice and have to do a price reduction or take the home off the market.”

The Redfin report notes that the market is now a mix of good and bad for homebuyers, who are seeing higher monthly payments than earlier this year due to the spike in interest rates — averaging 5.52% for a 30-year fixed mortgage in June, the report shows. At the same time, homebuyers are facing less competition as home inventory starts to bump up slightly.

The dip in competition often allows homebuyers to make less risky offers that avoid waiving protections like home inspections and appraisal contingencies.

Highlights from the June report include the following:

  • Total homes sold for the month of June came in at 524,200, a 15.5% year-over-year decline.
  • Pending home sales in June stood at 500,000, a 12.6% drop from a year earlier.
  • New home listings also were down 4.4% year-over-year in June, at 636,500.
  • Total homes for sale in June stood at 1,450,900, up 1.8% year over year.
  • Median days on the market jumped from three to 18 year over year as of June while months of housing supply also was up over the period, from 0.5 to 1.7 months.
  • The volume of homes sold above list price in June stood at 55.5%, down 0.9 percentage points from June 2021.

Full article at housingwire.com

Think Home Prices Are Going To Fall? Think Again

5205 NW 141st St, Vancouver, WA 98685
Presented by Marci Caputo & Mark Long | Offered at $1,100,000 | MLS# 22436969

From Keeping Current Matters

Over the last two years, the rate of home prices appreciated at a dramatic pace. While that led to incredible equity gains for homeowners, it’s also caused some buyers to wonder if home prices will fall. It’s important to know the housing market isn’t a bubble about to burst, and home price growth is supported by strong market fundamentals.

To understand why price declines are unlikely, it’s important to explore what caused home prices to rise so much recently, and where experts say home prices are headed. Here’s what you need to know.

Home Prices Rose Significantly in Recent Years

The graph below uses the latest data from CoreLogic to illustrate the rise in home prices over the past year and a half. The gray bars represent the dramatic increase in the rate of home price appreciation in 2021. The blue bars show home prices are still rising in 2022, but not as quickly:

You might be asking: why did home prices climb so much last year? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was extremely high, and supply was record low.

Where Experts Say Prices Will Go from Here

While housing inventory is increasing and buyer demand is softening today, there’s still a shortage of homes available for sale. That’s why the market is seeing ongoing price appreciation. Mark Fleming, Chief Economist at First American, explains it like this:

“. . .we’re still well below normal levels of inventory and that’s why even with the pullback in demand, we still see house prices appreciating. While there is more inventory, it’s still not enough.”

As a result, experts are projecting a more moderate rate of home price appreciation this year, which means home prices will continue rising, but at a slower pace. That doesn’t mean prices are going to fall. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

In other words, even with higher mortgage rates, moderating buyer demand, and more homes for sale, experts say home price appreciation will slow, but prices won’t decline.

If you’re planning to buy a home, that means you shouldn’t wait for home prices to drop to make your purchase. Instead, buying today means you can get ahead of future price increases, and benefit from the rise in prices in the form of home equity.

Full article on Keeping Current Matters

Housing Inventory Continues To Grow Even As New Listings Dip

1579 Fir Crest Rd, Mosier, OR 97040
Presented by England Property Group | Offered at $1,895,000 | MLS# 22429678

From Forbes

The week ending July 9 saw active inventory in the housing market continue to grow at a double-digit annual pace, even as new sellers took a step back from the market around the 4th of July holiday.

“This year’s summer housing markets are feeling the heat of record-high home prices on top of scorching inflation at a 40-year high,” said George Ratiu, senior economist and manager of economic research for Realtor.com. “As households pay much more for cars, clothing, food, gasoline and services, there are fewer dollars left over from each paycheck at a time when housing affordability is a growing challenge.”

For a household with a $75,000 income, only 23% of homes on the market are affordable, down from 50% of inventory in 2018,” said Ratiu. “While these trends are resulting in a cooler summer home buying season than usual, the road ahead points towards a promising shift, away from 2021’s severe undersupply and win-at-all-costs competition. As the Fed continues to fight inflation, borrowing costs will keep rising, cooling demand at a time when we’re seeing more homes for sale. In turn, prices will continue to adjust to a new equilibrium.”

The median listing price advanced by 15.9% over last year, in its 30th consecutive week of double-digit yearly gains. However, listing price growth is moderating, moving below the pace seen in late May and early June. With softening demand and rising supply, Realtor.com expects to see home price growth continue to ease in the second half of 2022.

New listings—a measure of sellers putting homes up for sale—declined 6% from one year ago, reflecting a pullback in seller activity over the Independence Day holiday. Still, more homes have come up for sale this year compared to a year ago in 13 of the last 16 weeks, a trend that is expected to return. Many homeowners are ready to pursue Covid-delayed plans to sell, while capitalizing on still-high prices.

Active inventory continued to grow, rising 28% above one year ago. The shift in supply is due to several weeks of new listings coming online, boosting the inventory level almost a third higher than a year ago. Additionally, houses are also spending longer on the market in many large metro areas, contributing to a boost in homes for sale. The report found that real estate markets remain undersupplied compared with 2019, but they are moving in the right direction.

Homes spent just one day less on the market than this time last year. The pace of transactions is moderating noticeably as higher prices and interest rates take a toll on demand. At this rate, Ratiu said homes will start lingering longer on the market and sellers will have to contend with more competition.

Full article on Forbes

Home Buying Is 5% Cheaper Than a Week Ago

1643 Village Park Ln, Lake Oswego, OR 97034
Presented by Tami Ferrey | Offered at $1,595,000 | MLS# 22699226

From REALTOR® Magazine

Mortgage rates are falling—at least for now—after posting rapid jumps in June. Over the last two weeks, the 30-year fixed-rate mortgage has dropped by one-half of a percentage point. Home buying is about 5% more affordable than a week ago, translating to about $100 less in monthly mortgage payments, economists at the National Association of REALTORS® wrote on the Economists’ Outlook blog.

Rates are dropping as concerns mount over a possible economic recession, says Sam Khater, Freddie Mac’s chief economist. “While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” Khater says.

Freddie Mac reports the following national averages with mortgage rates for the week ending July 7:

  • 30-year fixed-rate mortgages: averaged 5.30%, with an average 0.8 point, dropping from last week’s 5.70% average. Last year at this time, 30-year rates averaged 2.90%.
  • 15-year fixed-rate mortgages: averaged 4.45%, with an average 0.8 point, dropping from last week’s 4.83% average. A year ago, 15-year rates averaged 2.20%.
  • 5-year hybrid adjustable-rate mortgages: averaged 4.19%, with an average 0.4 point, falling from last week’s 4.50% average. A year ago, 5-year ARMs averaged 2.52%.

Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

Full article on REALTOR® Magazine

Housing Shortage Starts Easing as Listings Surge in June

842 Carpenter Hill Rd, Medford, OR 97501
Presented by Mike Lee | Offered at $1,399,000 | MLS# 220142811

From cnbc.com

A historic housing shortage brought on by the one-two punch of slow construction and strong pandemic-induced demand is finally starting to ease.

Active listings for homes jumped 19% in June, the fastest annual pace since Realtor.com began tracking the metric five years ago. And the number of new listings during the month finally surpassed typical pre-Covid levels, up 4.5% from a year ago. Overall inventory, however, is still about half pre-Covid levels.

Some markets that saw the biggest surges in demand during the pandemic are now among those seeing the biggest gains in supply: Austin inventory was up close to 145% from a year ago, Phoenix was up 113%, and Raleigh up nearly 112%. Other markets are still seeing supplies fall: Miami is down 16%, Chicago is down 13%, and Virginia Beach is down 14%.

“We expect to see additional inventory growth in July, building on accelerated improvements seen throughout June,” said Danielle Hale, chief economist at Realtor.com, adding that the supply gains increased as the month progressed.

And Hale said even more homeowners could decide to sell, adding new supply as buyers grapple with higher costs and difficulty finding homes that fit their budgets.

Still, the expanding supply is not easing sky-high home prices yet. The median listing price in June hit another record high of $450,000 according to Realtor.com. Annual gains are moderating slightly, but still up almost 17%. That’s partly because the share of larger, more expensive homes is rising.

The costs of owning the median-priced home in the second quarter required 31.5% of the average U.S. wage, according to a new report by ATTOM, a property data provider. That’s the highest percentage since 2007 and up from 24% the year before, marking the biggest jump in more than two decades. Lenders generally see a 28% debt-to-income ratio as the ceiling for approving a mortgage. It’s why some potential homebuyers today are no longer qualifying for a mortgage.

As a result, the affordability of buying a home in the second quarter dropped in 97% of the nation, according to ATTOM. That’s up from 69% in the same quarter a year ago, and the highest reading since just before the housing crash in the Great Recession.

ATTOM calculates the affordability for average wage earners by determining the amount of income needed for major homeownership expenses on a median-priced home, assuming a loan of 80% of the purchase price and a 28% maximum debt-to-income ratio.

“With interest rates almost doubling, homebuyers are faced with monthly mortgage payments that are between 40% and 50% higher than they were a year ago — payments that many prospective buyers simply can’t afford,” said Rick Sharga, executive vice president of market intelligence at ATTOM.

A few factors could thwart the continued growth in inventory levels, including a pullback from potential sellers who might decide to wait for the market to strengthen again. Still, Hale of Realtor.com noted that new and pending home sales were up this month, so some people might feel now is the right time to buy.

“As expectations of higher future mortgage rates rise, today’s home shoppers could be more motivated, especially now that they’re seeing more options to choose from,” Hale said.

Full article at cnbc.com