Welcome to this week's roundup! I'm your host Nagaraj Annaiah, and this is where you get all the details on the hottest new developments in the world of Bay Area real estate—from economic trends to recent property sales, and everything in between. Let's get started.
Selling your home this year? Why Thursdays and late April are the best time to list
The best time to get top dollar for your home is already here, which means if you've been thinking of selling you should do it now. The annual spring home buying season is the busiest and most competitive time in the real estate market. When the weather breaks and buyers start to emerge from their winter hibernation, demand for housing rises and inventory shrinks. And when there are more buyers than sellers, prices go up. This year is no different, but COVID has made the market stronger than ever.
And this spring could provide homeowners with an opportunity to earn even more than usual. Housing market experts at Zillow predict that homes listed in April will sell for 2.8% more than they would if they were listed at another time of year, or a boost of $9,300 on the typical U.S. home. If you're looking for an even better time, list your home on a Thursday—homes listed on any Thursday will sell for about $1,100 more than homes listed on other days of the week. For once, you can time the market and make more money!
Homebuyer Competition Drops for First Time in Six Months Amid Surge in Mortgage Rates, Home Prices
So, you want to buy a house! Congratulations—that's awesome. But your home-buying experience might not be quite as cute and cuddly as you'd hoped. 65% of home offers written by Redfin agents faced competition on a seasonally adjusted basis in March—a 1.7% decrease from February's rate of 66.7%, which was actually the first month-to-month decline since September. This means that bidding wars are going to ease up, and you won't have to compete as strongly for your dream home. And it'll be easier to get the price you want—no need to offer drastically over the asking price anymore.
That's good news for folks who can still afford a house, because soon you won't have to worry about getting outbid by other buyers or facing an uphill battle with financing.
Unfortunately, the slowdown in competition won't help those who have already been priced out of homeownership and are now grappling with soaring rental costs.
Experts Predict at Least Two More Years Before Housing Inventory Climbs to Pre-Pandemic Levels
The housing market has been changing with the times. Who even knows what it will look like in ten years? All we can do is try and make educated guesses, and that's exactly what a panel of experts did recently in a Zillow survey.
These savvy individuals were asked to predict when they think housing inventory will return to pre-pandemic levels. The most frequent answer was 2024, so let's take a look at how they came to that conclusion.
A smart place to start is 2019, when there were an average of 1.6 million homes for sale each month. In 2022, that number has fallen to just over one million—a truly staggering decrease. It seems like people just aren't putting their homes on the market at all!
One thing these experts have pointed out is that low inventory has been one of the major causes for the rapid rise in home values over the last couple of years. We are talking about a 32% increase in two years. That's a pretty impressive statistic by itself, but it also means that if this trend continues, fewer people will be able to buy homes at all!
An average of 9% is projected for the growth in home value in 2022. That's down from 19% in 2021, but still better than the 6.6% predicted earlier by these very experts.
Typical Buyer’s Monthly Payment Up 39%—The Biggest Annual Gain on Record
Mortgage rates are hitting a 12-year high—and it looks like buyers are starting to back down. According to Redfin's data, the average 30-year fixed rate is hovering at 5.1%, and the typical monthly mortgage payment has jumped 39%. The share of listings with price cuts has risen to its highest level since November. Pending home sales have dropped their largest year-over-year decrease since mid-February, and mortgage purchase applications have fallen 17%.
The data indicates that buyers are taking a step back from the turbulent market as mortgage rates remain high, which isn't surprising given that purchasing a home is one of the most significant financial investments people make. However, it doesn't seem as though the ratio of buyers to sellers has changed much yet—which is why I haven't seen a substantial drop in bidding wars or in homes selling quickly. It will be interesting to see if this changes as summer approaches.
If you're thinking of buying a home, the time is now—and I'm not just saying that because I'm a real estate agent. The fact is, home prices are up, and they're not likely to stay there for long. Let me break down the numbers for you. The median home sale price was up 17% year over year—the biggest increase since August—to a record $395,600. The median asking price of newly listed homes increased 16% year over year to $404,950, a new all-time high. The monthly mortgage payment on the median asking price home rose to a record high of $2,349 at the current 5.1% mortgage rate.
So, if you've been thinking about buying a house, you may want to act fast: Pending home sales were down 3% year over year, the largest decrease since mid-February; new listings of homes for sale were down 4% from a year earlier; and active listings fell 19% from last October.
What does this mean? Because of the COVID-19 pandemic, many people have been working from home. This has caused a shift in real estate trends, as people are now looking for houses with more space.
Sun Belt buyers need 40% more income than they did a year ago to afford a home
If you've been thinking about buying a house in the Sun Belt, it might be time to get serious. In your first year living there, your mortgage payment will likely go up more than any place else in the country.
According to Redfin, homebuyers need 40% more income than they did one year ago to afford a mortgage in the Sun Belt. That's compared to 34% across the country as a whole. Sun Belt is still relatively affordable compared to the country's "gateway markets," but it's getting less so. This means that if you've been waiting for prices to get lower, you're probably out of luck—and it's time to buy. Although the annual increase is way lower than Sun Belt at 26.4%, homebuyers in San Francisco need to earn more, exactly $292,556 to afford a typical home there. That's the highest value among the metros analyzed by Redfin.
Overheated housing market’s first casualty — mortgage companies. But wider impact looms
As the housing market heats up, so does its impact on the mortgage industry. Many companies such as Better.com and Movement Mortgage are experiencing a slowdown in new loan applications and have subsequently started laying off workers. Even smaller mortgage outfits across the country are being forced to either close shop or merge with another company to stay afloat.
Interest rates on mortgages have risen above 5 percent for 30-year fixed mortgages, and when this happens, refinancing becomes less common, and less profitable. The truth is that every mortgage company needs to make some cuts because the margins in the business have nearly disappeared, whether large or small. But what's most important is that policymakers pay attention to these macroeconomic changes and make sure they're taking steps to protect both consumers and businesses during this time of uncertainty.
If you're looking for a new home or to refinance your current one, you'd better act fast! The good news is that there are plenty of options for financing your home purchase, so you can still get a great deal on your mortgage even if your local mortgage company does close down.
It's official: We're in a housing market where you can earn thousands of dollars more by just timing your sale right. In other words, we are currently experiencing an amazing seller's market with few properties on the market and intense demand from buyers wanting to purchase a home now, while mortgage rates remain at historic lows compared to 16.6% in 1980. This means that buyers are willing to pay top dollar for a home they love — especially if they fear they'll miss out on it. But if you are selling a home, don't do it yet. Watch this video first.
Be sure to like and subscribe to my channel, and feel free to ask any questions you have in the comments below. I'll see you again next week! Until then, keep your frown upside down.