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Realtor.com Reports Weekly Inventory down only 6% Year-over-year

Today, in the Calculated Risk Real Estate Newsletter: Realtor.com Reports Weekly Inventory down only 6% Year-over-yearExcerpt: Realtor.com has monthly and weekly data on the existing homes. Here is their most recent weekly report released yesterday: W…

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Today, in the Calculated Risk Real Estate Newsletter: Realtor.com Reports Weekly Inventory down only 6% Year-over-year

Excerpt:
Realtor.com has monthly and weekly data on the existing homes. Here is their most recent weekly report released yesterday: Weekly Housing Trends View — Data Week Ending April 23, 2022. They have data on list prices, new listing and more, but this focus is on inventory.
Active inventory is down just 6 percent from a year ago.

The number of homes for sale is past this year’s seasonal low, which was also a record low, which means the number of homes for sale is climbing week to week and month to month as it typically does in spring. While the market has not yet caught up to last year’s level, this week marked a big jump forward. The gap between this year’s homes for sale and last year’s is one-fifth the size that it was at the beginning of the year. The catch up is likely to continue, as we noted last week, as new listings grow and home sales slow, and we expect active inventory to surpass year ago levels in the next few months. This growth will mean more options for shoppers than they’ve had in a while, even though inventory continues to lag pre-pandemic normal.
Here is a graph of the year-over-year change in inventory according to realtor.com. Note: I corrected a sign error in the data for Feb 26, 2022.

The previous week, inventory was down 12.6% YoY according to Realtor.com. That is close to the 11.2% that Altos reported. I expect Altos to report a single digit year-over-year decline in inventory on Monday.
There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

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Real Estate

Should I Buy a House Now? (It’s Personal and Complicated)

Mortgage rates are up and some markets have cooled down, but the reality is that the decision is very personal.

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Mortgage rates are up and some markets have cooled down, but the reality is that the decision is very personal.

The right time to buy a house can be relative. My wife and I decided it was time to get back into owning our principle residence because the rental market had become too expensive to make sense.

We had sold our West Palm Beach, Fla., home during the pandemic because we needed more space with both of us working at home. At the time, we used the profits to buy a resort property in the Orlando area near Disney World and we rented a large four-bedroom townhome.

The space was about double what we had in the condo we had sold, but we traded a building that was close to downtown for one where going anywhere except Target requires getting in the car. It was a sacrifice, but we needed to stay on our son's school bus route as he was a junior going to an out-of-town school on a special program and moving outside that route would have meant us having to drive him.

In year one of our rental, we paid $2,495 per month and that went up to $2,700 in year two. We had planned, once he graduated, to rent a slightly smaller place in Delray Beach, Fla., right in the heart of the city's vibrant downtown for a year to decide if we might want to buy something in that area.

Rising rental prices made that impossible. We would have had to pay between $3,200 and $3,500 per month to get even close to what we wanted making renting more expensive than spending $400,000 to buy a new home.

Image source: Shutterstock

Buying a Home May Take Sacrifices

In our case, since we planned to buy eventually, rising mortgage rates and a very tough market for buyers were not our deciding factor. Ultimately, we went with the logic that spending over $3,000 per month to rent a home, made little sense when we (thought) we could find something we would be happy in for $350,000 or less.

That turned out to be not true if we wanted to stay in South Florida. Prices have gone up significantly in West Palm Beach and we thought we would be able to find what we wanted in some nearby cities and towns that generally have lower prices.

Technically there were properties we could afford, but most had major flaws. Some were the nicest condo in a crummy development while others needed more work than we could afford to do at the price we would likely pay for the home.

Ultimately, we decided that since we wanted a house in a nice community with a pool, a gym, and walking trails, we decided to open up our search. We eventually found a single-family home about 40 minutes north of where we would have chosen to live that we were able to buy for well within our budget (even when you factor in the need for a total renovation).

Buying a Home Is Personal

Mortgage rates may keep rising or they may go back down. Some areas may see prices crash while others may see them keep inching higher. Markets can vary -- there's no one singular U.S. housing market -- and where you pick to live matters.

The reality is that buying a house has little to do with the market or mortgage rates. It's about your needs right now and doing a risk/reward assessment. We believed that renting for a year in an area we probably could not afford to buy in made little sense.

In addition, while mortgage rates were not a factor (we got in at 3.75% just before they started to climb toward 5%), the market was. We looked at all the people flocking to Florida and how that has forced people who already live here to move to new towns. Our new town, seemed like a market that may cool off, but it was unlikely that waiting a year would bring us a better price (that has so far proven true as homes similar to ours are selling for $40,000-$50,000 more than we paid just four months ago).

Should I buy a home is a question you should answer based on your needs and not economic forecasts. Do your homework, but remember that if you're going to live there for an extended period of time, the math right now may not matter all that much.

Buying a home is an investment, but it's also where you will live. Use your head (and get help from a Realtor) but also use your heart. Don't let your heart trick you into spending too much (that's where the head comes in) but make a decision that fits your reality not what experts say about the housing market.

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Economics

US housing market is at a crossroads

With a sharp rise in mortgage rates and weak existing-home sales, Moody’s concluded that the incredible rise in home prices is over. Other housing market…

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The real estate market is cooling down

Reports released this week by several respected market observers point to less good and increased bad and ugly ahead for the housing market.

For some of the good, a U.S. Census Bureau report released late last week spurred a bout of optimism when it revealed that new-home sales jumped by nearly 11% month-over-month in May on a seasonally adjusted basis, after declining by 12% in April. 

Moody’s Investors Service, in a housing-market report released this week, puts some ugly back into the home-sales figures for May, however.

“At 696,000 units, May new home sales were around 17% below the recent peak of 839,000 units in December last year,” the Moody’s report notes. “[On June 21], the National Association of Realtors said that existing-home sales declined for the fourth consecutive month. 

“Existing-home sales fell in May by 3.4% on a seasonally adjusted basis to 5.41 million, the lowest since June of 2020 and similar to pre-pandemic levels.”

Those figures, along with “sharp recent increases in mortgage rates” and other supporting data, lead Moody’s to conclude that the “U.S. home-price boom is over.” The firm, which rates securitization offerings and provides other capital-market services, predicts “material declines” in both new- and existing-home transactions this year, compared with 2021.

Supporting the ugly outlook for the housing market is the release today, June 29, of the quarterly CFO Survey, conducted jointly by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. The survey of more than 300 U.S. financial executives conducted between May 25 and June 10, shows optimism about the broader U.S. economy continuing to decline.

The average index score for the current survey was 50.7, compared with 54.8 in the prior quarter and 60.3 two quarters ago.

“Price pressures have increased, real revenue growth has stalled and optimism about the overall economy has fallen sharply,” said John Graham, a Fuqua finance professor and the survey’s academic director. “Monetary tightening [by the Federal Reserve] is one of several factors dampening the economic outlook.” 

The CFO Survey’s findings are echoed by a revised first-quarter 2022 gross domestic product (GDP) estimate released Wednesday by the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA). It shows that a drastic economic slowdown is already underway.

“Real gross domestic product [a measure of all goods and services produced in the economy] decreased at an annual rate of 1.6 percent in the first quarter of 2022 …,” the BEA report states. “In the fourth quarter of 2021, real GDP increased 6.9 percent.”

The BEA’s first-quarter GDP estimate, it’s third to date, was revised downward from -1.4% and -1.5% in the two prior estimates. The grim data led Mortgage Capital Trading (MCT), a San Diego-based capital market software and services firm, to broach the “R“ word in its daily market-overview report.

“Concern over a slowing economy and aggressive interest rate hikes from the Fed are beginning to dominate market sentiment,” the MCT report states. “This morning’s GDP release [on June 29] came with a downward revision for the last reading, further supporting views that a recession is either in progress or coming soon.”

What does all this mean for the housing market in the months ahead? The Moody’s report attempts to frame some of the expectations.

“We expect some increases in existing-house prices over the next 18 months, though for appreciation to be well below the general rate of inflation,” the Moody’s report states. “After that, we expect home appreciation to settle in at levels somewhat lower than the rate of overall U.S. inflation.”

The report even indicates that there “is risk that existing home prices will have a minor correction over the next two years, similar to housing markets in many other developed counties facing risks after recent booms.” 

The “moderation” in the U.S. housing market is ongoing and the full effects of recent rate increases have yet to be fully realized, the Moody’s report adds, especially with respect to housing prices.

Moody’s predicts that housing demand will “dampen significantly” in the months ahead due to the doubling of rates for 30-year fixed mortgages since the start of the year, which is fueling a huge jump in monthly mortgage costs. Freddie Mac’s most recent Primary Mortgage Market Survey shows the average 30-year fixed rate mortgage at 5.81% as of June 23. 

“The monthly costs of new mortgages on existing homes sold at median transaction prices [are] more than 60% higher than a year ago,” the Moody’s report states. “Although higher mortgage rates do not always drive home prices lower, they typically affect sales activity and drive down the rate of price appreciation. 

“We also expect higher rates to restrict for-sale supply because current homeowners will be reluctant to lose low-rate fixed borrowing costs.”

So, in effect, moderating or even declining home prices could be neutralized by rising borrowing costs, leading the housing market toward stagnation — the doldrums — in the worst-case scenario.

There is some good news mixed in with all this bad and ugly, however. Moody’s points out that some “fundamental housing strengths” will likely help to mitigate the degree of any market correction, at least over the next 12 to 18 months.

Those strengths include “favorable demographic trends, solid underwriting of outstanding mortgages and lingering housing supply constraints from a period of underbuilding,” according to the Moody’s report. Also on the bright side, according to Moody’s, is that a moderate decline in housing prices could be good for the market longer-term. That’s assuming the Federal Reserve wins the fight to tame inflation, now running at 8.6%,  without causing a major spike in unemployment, which was at 3.6% in May for the third month in a row, according to the Bureau of Labor Statistics.

In short, the housing market has reached a fork in the road, based on the Moody’s analysis — with one path leading to the doldrums, or even decline, and the other toward resurgence and a new normal.

“If U.S. home prices were to decline modestly, it would increase affordability for potential homebuyers and improve demand, including for individuals who were priced out of the market in the recent months because of rapidly rising interest rates,” Moody’s reasons in its report. “However, sustained large increases in mortgage rates or a material weakening in the labor market could lead to sharper declines in housing activity and prices.”

The post US housing market is at a crossroads appeared first on HousingWire.

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Real Estate

Should I Buy a House Now? (June 2022)

Mortgage rates are up and some markets have cooled down, but the reality is that the decision is very personal.

Published

on

Mortgage rates are up and some markets have cooled down, but the reality is that the decision is very personal.

The right time to buy a house can be relative. My wife and I decided it was time to get back into owning our principle residence because the rental market had become too expensive to make sense.

We had sold our West Palm Beach, Fla., home during the pandemic because we needed more space with both of us working at home. At the time, we used the profits to buy a resort property in the Orlando area near Disney World and we rented a large four-bedroom townhome.

The space was about double what we had in the condo we had sold, but we traded a building that was close to downtown for one where going anywhere except Target requires getting in the car. It was a sacrifice, but we needed to stay on our son's school bus route as he was a junior going to an out-of-town school on a special program and moving outside that route would have meant us having to drive him.

In year one of our rental, we paid $2,495 per month and that went up to $2,700 in year two. We had planned, once he graduated, to rent a slightly smaller place in Delray Beach, Fla., right in the heart of the city's vibrant downtown for a year to decide if we might want to buy something in that area.

Rising rental prices made that impossible. We would have had to pay between $3,200 and $3,500 per month to get even close to what we wanted making renting more expensive than spending $400,000 to buy a new home.

Image source: Shutterstock

Buying a Home May Take Sacrifices

In our case, since we planned to buy eventually, rising mortgage rates and a very tough market for buyers were not our deciding factor. Ultimately, we went with the logic that spending over $3,000 per month to rent a home, made little sense when we (thought) we could find something we would be happy in for $350,000 or less.

That turned out to be not true if we wanted to stay in South Florida. Prices have gone up significantly in West Palm Beach and we thought we would be able to find what we wanted in some nearby cities and towns that generally have lower prices.

Technically there were properties we could afford, but most had major flaws. Some were the nicest condo in a crummy development while others needed more work than we could afford to do at the price we would likely pay for the home.

Ultimately, we decided that since we wanted a house in a nice community with a pool, a gym, and walking trails, we decided to open up our search. We eventually found a single-family home about 40 minutes north of where we would have chosen to live that we were able to buy for well within our budget (even when you factor in the need for a total renovation).

Buying a Home Is Personal

Mortgage rates may keep rising or they may go back down. Some areas may see prices crash while others may see them keep inching higher. Markets can vary -- there's no one singular U.S. housing market -- and where you pick to live matters.

The reality is that buying a house has little to do with the market or mortgage rates. It's about your needs right now and doing a risk/reward assessment. We believed that renting for a year in an area we probably could not afford to buy in made little sense.

In addition, while mortgage rates were not a factor (we got in at 3.75% just before they started to climb toward 5%), the market was. We looked at all the people flocking to Florida and how that has forced people who already live here to move to new towns. Our new town, seemed like a market that may cool off, but it was unlikely that waiting a year would bring us a better price (that has so far proven true as homes similar to ours are selling for $40,000-$50,000 more than we paid just four months ago).

Should I buy a home is a question you should answer based on your needs and not economic forecasts. Do your homework, but remember that if you're going to live there for an extended period of time, the math right now may not matter all that much.

Buying a home is an investment, but it's also where you will live. Use your head (and get help from a Realtor) but also use your heart. Don't let your heart trick you into spending too much (that's where the head comes in) but make a decision that fits your reality not what experts say about the housing market.

Read More

Continue Reading

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