Home prices inch up to new highs

Full analysis: https://lnkd.in/gMqgDPUK Today's CoreLogic S&P Case-Shiller Index showed a 5.5% year over year increase, the sixth month of annual increases following two months of annual declines. With the rebound in appreciation this year, home prices are now up by 0.6% compared with the June 2022 peak and up by 6.1% from the January 2023 bottom. As we close 2023 with a full year of data, the S&P CoreLogic Case-Shiller Index indicated again the resiliency of home prices against surging borrowing costs but amid historical supply challenges. In 2023, home prices increased 2.4% compared to 2022 when gains averaged 14.8% for the year. Between 2014 and 2019, home price growth averaged 5.2%. While prospects for 2024 housing market activity looked promising coming into the year, elevated mortgage rates, which recently took another turn higher, are posing a challenge for both buyers and sellers. With early data for supply of listings of homes for sale and contracts signed in January and February, the expected 2024 rebound is yet to be seen, particularly as we approach spring home-buying season. But despite the constraints on sales activity, home prices are expected to move sideways as the imbalance between buyers and sellers continues. The latest CoreLogic’s Home Price Index (HPI) forecast estimates that home prices will increase by another 3% on average in 2024. ? High mortgage rates continued to impact monthly price gains in December, with the non-seasonally adjusted month-over-month index declining for the second time since January 2023, down by 0.4% in December, compared with the seasonally no changed recorded on average between 2015 and 2019. The 10-city and 20-city composite indexes posted the sixth month of annual increases in December, up by 7% and 6.1%, respectively. Both indexes are also up by 7.4% and 6.7%, respectively, since the beginning of 2023. The 10-city index includes currently better-performing metro areas such as New York and Chicago, which have seen relatively stronger housing markets since mid-2022, as the return to cities and offices continues. ?Many of these metros are catching up on home prices gains that pandemic-era boomtowns experienced during COVID-19. The metros with the strongest gains since the beginning of the year include Detroit and San Diego, up by 9.1%; San Diego, up by 9.9%; and Chicago, up by 8.6%.

Perhaps we need to change the concept from housing affordability to housing unaffordability. The latter has garnered the attention of many prospective buyers who feel blocked by the market. We often talk about the hurdles associated with affording a home purchase, but how are they affecting prospective homebuyers? There are also impacts affecting the broader economy, including when activity slows. A new Bankrate survey provides much more insight into the issue. Among aspiring homebuyers, more than half say the cost of living is too high or their incomes aren't high enough to afford the down payment and closing costs. People have been through a lot over the past several years, including the highest inflation in a generation. In addition, home prices have risen and mortgage interest rates have soared. The weekly average for the 30-year fixed-rate mortgage recently went back above 7%. The survey also finds that 1-in-5 homeowners believe they will never be able to afford a home purchase. Among millennials, those aged 28-43, about 1-in-4 said credit card debt was holding them back while 14% cited student loan debt. This isn't just about the so-called American dream. Many businesses and workers are reliant on a healthy housing market. Think about home improvement, mortgages, and furniture sales, just to name a few. And, for better or for worse, home ownership is the primary means of new wealth creation in our country. Those who can't be part of that, in a sense, pay a price. Is there potential relief on the horizon? Perhaps. Interest rates are expected to be lower by the end of the year. If mortgage rates slip as expected, more current owners of homes might be more inclined to put their homes on the market, providing a much-needed boost to inventories. I expect we'll be following these trends very closely in the months to come. Please share your thoughts and let us know about your sense of the housing market and how home ownership relates to your money goals and dreams. Here's more on our survey as written by Jeff Ostrowski:

The disconnect between the cost of housing and income has increased dramatically. That's 100% an understatement and points to why many in younger generations are frustrated and having a harder and harder time becoming homeowners. So prices are higher and mortgage rates have gone up too; really putting a lot of people in impossible spots. Owning a home is not the most important piece of building and accumulating wealth but it is an important component - when the costs make sense...but if it's out of reach budget wise it makes less and less sense to many. Hope to hear your thoughts and happy to have this conversation. Via Visual Capitalist - https://lnkd.in/gJcY-PEy

The U.S. is facing a real housing affordability crisis, but if you're a homeowner you've really seen some incredible gains in home equity over the past few years.

2024 is expected to be a better year all around for home buyers and sellers. More inventory, lower interest rates, and more buyers are all on the table for the upcoming busy spring and summer home market. If you’re thinking of buying or selling in the coming months, here’s what to expect. Interest rates: Thankfully, interest rates are on their way down from the peak we experienced in 2023. With most experts predicting mortgage interest rates will rest comfortably in the six percent range, this is likely to bring more buyers to the table and drive up competition. Bidding wars: In 2023 and the last part of 2022, we experienced far less competition and bidding wars as rising interest rates priced many buyers out of the market. However, 2024 is expected to be a different ballgame, as falling interest rates should bring those same buyers back to the market. The concessions sellers made over the last 18 months will likely be a thing of the past if interest rates and pent-up buying demand continue to work well for sellers. Buyers in this new market should plan accordingly and present their highest and best offer to position themselves well in a bidding war. Competition: This year is predicted to bring more buyers to the market as buyers determined to wait until mortgage rates are lower will be happy with the dip in rates and realize they can’t wait forever. Pent-up buyer demand should lead to a good bit of competition and bidding wars. This increased competition does not mean sellers can phone it in, though, as in a fast-paced market, homes that sit longer than others will stagnate. Sellers need to price their home with the help of an expert, taking care not to overprice it. It’s also crucial that sellers stage their home and present it in the best light possible in light of the increased competition we’re predicting this year. Home prices: Good news on the housing appreciation front, as experts across the board predict price appreciation will get closer to normal levels next year. Research shows us that in October 2023, purchasing the typical home with a 30-year fixed-rate mortgage and 20% down payment required 39% of the typical household paycheck. Typically, this figure is closer to 21%, and in 2024, experts predict this to come down, dipping under 30% by the end of the year. More inventory: The big story here is that most sellers who have been sitting on the sidelines, unwilling to trade their ultra-low interest rate for a higher one will finally get off the sidelines and make their move this year, realizing they can’t wait forever. With most experts predicting rates will be lower this year in the six to six and a half percent range, we’re expecting this will work to free up housing inventory. ? ? ? ? #TheHelffrichGroup #KarenAndMike #HowardHanna #realestate #realtors #realestateexperts #realestateohio #realestateagent #homebuying #homeselling #howardhannanews #realestatemarket

Home prices continue to hold strong and steady as demand greatly exceeds supply. However, more and more local markets are seeing some price easing, which is good for anyone looking for a home there. Later this year, when mortgage rates begin to dip, as expected, getting a conventional mortgage will get that much more affordable, which is good and bad. Good for those who can find a home to buy, but bad for those who can't. https://lnkd.in/e-aF4qbx

I predicted in Wall Street Journal in August that the rapid rate hikes by the Fed, aimed at lowering prices in credit sensitive markets, could raise housing prices rather than lower them. Volume has fallen dramatically because both supply and demand was cut with the rate hikes but those cuts has opposing effects on prices.

?? New home sales grew 1.5% in January, slightly missing expectations. Sales are still higher than this time last year, while the median price has fallen. Builders are more responsive than sellers to changing market conditions, offering mortgage rate buydowns and other incentives to help bring in buyers. The median price of a new home was $420,7000 in January, about $7000 lower than 2023 levels and $37,000 lower than 2022 levels. The housing shortage has been a tailwind for builders, who have been busy ramping up construction to meet strong demand from millennials and other first-time buyers. The concern is mortgage rates and how they respond to changing market conditions. Read more from my latest #housing report: https://lnkd.in/g8b_Cp7C

#Housing conditions to turn up. New home sales advanced modestly in January to a three month high of 661,000 units SAAR. While the figure fell short of estimates, the decline was centered in one region, the South. Recall that new home sales represent signed contracts, and are thus considered a leading indicator of housing market activity. This might also be why, as far as housing data are considered, it is not as affected by poor weather conditions. At any rate, I suspect new home sales strengthen into the spring months. Homebuilder sentiment has been advancing with the NAHB's six-month sales outlook climbing in February to its best level since June 2023. About a week ago, the CEO of Toll Brothers had this to say, "[since mid January] we have seen a meaningful uptick in demand that has continued through this past weekend.”?Remarkable given the level of mortgage interest rates.