Rising home prices keep pushing up equity for homeowners. The average homeowner gained about $64,000 in equity from the first quarter of 2021 to the first quarter of this year, according to a new report from CoreLogic.
About 62% of all properties nationwide saw an increase in annualized equity gains in the first quarter. California, Hawaii and Washington posted the highest average equity increases at $141,000, $139,000 and $114,000 respectively, according to the report. On the other hand, the states seeing the lowest equity gains were Iowa ($17,300) and North Dakota ($19,000).
This chart from CoreLogic shows the average equity gains from last year’s first quarter to this year’s in each state across the country.
While many industry analysts have expected increasing hesitation in the housing market, buyers largely remain optimistic, a new report says.
About 28% of 5,000 prospective home buyers are “mostly confident” that the next three months will be a good time to buy a home, according to a new survey from OJO Labs, a real estate search website operated by Movoto. However, they aren’t quite as confident as they felt in April when 31.1% of respondents responded at that level.
That group of buyers is the largest cohort of respondents, the survey authors say. Further, 18.7% of survey respondents “strongly agreed” that the next three months will be a good time to buy a home, bringing the total of positive responses to about 47% of respondents overall, the authors say.
Home buyers have felt headwinds with rising prices and mortgage rates and a shortage of homes for sale. But they’re not giving up their hunt this spring and summer.
Buyers may see the equity other homeowners are accumulating and be drawn to the long-term financial benefits of homeownership.
Homebuyers realize they need to be quick with their offers in today’s competitive housing market, a new report says. Sixty-five percent of buyers recently surveyed said they’d make an offer within three days of viewing it if they’re interested. Twenty percent say they’d make an offer immediately, according to Bank of America’s new 2022 Homebuyer Insights Report, based on about 2,000 responses.
Homes spent an average of 17 days on the market in March. Eighty-seven percent of homes sold in March were on the market for less than a month, according to National Association of REALTORS® data.
Higher home prices and mortgage rates are straining buyers’ budgets. A home is often the most expensive purchase people make in their lifetime. Buyers are finding they have to budget wisely or increase the amount of money they can devote toward homeownership.
Some buyers say they’ve had to moonlight or take on freelance work to try to earn more money. Fifty-six percent of home buyers surveyed said they are willing to consider a second job to earn supplemental income for a home purchase, according to the Bank of America survey. One-third of prospective buyers said they’d consider starting an online store to sell handcrafted pieces or selling some of their belongings to increase the amount of money they have to purchase a home.
Homebuyers also are showing some willingness to compromise to move toward homeownership, including by:
· Moving to an up-and-coming neighborhood (82%)
· Buying a home further from entertainment, restaurants, and shopping (79%)
Pending home sales fell in February for the fourth consecutive month, but the decline isn’t due to waning demand from eager home buyers. In fact, it’s just the opposite: Competition is growing fiercer, even as buyers face record-low inventory.
The National Association of REALTORS®’ Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—fell 4.1% month over month in February and 5.4% annually. All four major regions of the U.S. registered a decline in annual contract activity last month. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale,’” says NAR Chief Economist Lawrence Yun.
Buyers are facing limited choices, higher home prices, and rising mortgage rates, which has led to a 28% annual increase in mortgage payments, according to NAR. Still, many aspiring home buyers are in a rush to get ahead of further rate increases that are likely on the horizon.
Yun is forecasting that 30-year fixed mortgage rates will likely average about 4.5% to 5% for the remainder of the year. He also is forecasting a 7% reduction in home sales in 2022 compared to 2021, partially due to higher costs pricing out more home buyers. “It is still an extremely competitive market, but fast-changing conditions regarding affordability are ahead,” Yun says. “Consequently, home sellers cannot simply bump up prices in the upcoming months but need to assess the changing market conditions to attract buyers.”
Rising home prices have brought rising equity gains for homeowners. In the fourth quarter, the average homeowner nationwide gained about $55,300 in equity over the past year, according to a new analysis released by CoreLogic, its latest quarterly “Homeowner Equity Insights” report.
Western state homeowners are continuing to see some of the largest equity gains by dollar value.
For example, Hawaii, California, and Washington saw the largest increases in average equity gains in the fourth quarter. Hawaii posted an average $128,300 annual gain, followed by a $117,000 increase in California, and $95,500 in Washington.