50 neighborhoods, zero open houses… By some measures, it’s never been harder to find a home in America — let alone an affordable one. The problem: there are fewer than half as many houses for sale as there were five years ago, and that’s driving up prices and forcing folks to put their white-picket dreams on ice. Homebuilding giants like Lennar and KB Home are benefiting as they race to get more houses on the market, but supply is still lagging behind.
- Sticker shock: Existing-home sales dropped to a five-month low in June. FYI: the median home sale price is $416K, about $100K higher than prepandemic.
- Window-shop: Even foreigners are cooling on US cul-de-sacs. International buying of US homes dropped by 14% to the lowest # on record (~85K homes).
- ZIP-code hop: In Q4, over a quarter of property searches on Redfin were in cities that prospective buyers didn’t live in, as remote workers looked to leave pricey metro hubs.
Golden handcuffs… People who snapped up houses during the near-zero-interest era don’t want to give up the sweet rates they’ve locked in. Close to 90% of mortgage-holding homeowners have a rate under 6%, while the current 30-yr fixed is closer to ~7%. Homeowners are staying put, even if they’ve outgrown their houses: over 80% say they feel “locked in” by low rates. Meanwhile, others feel locked into the lease life:
- #ForeverRenters: 70%+ of renters say they’ll never be able to afford a home. Rent prices are cooling for the first time in years, after surging throughout the pandemic.
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Gridlock needs a (Fed) green light… Potential buyers are waiting for lower rates to afford a home, and homeowners who want to sell are waiting for lower rates to be free of their golden cuffs. Nearly 80% of consumers think it’s a bad time to buy a house, and over half of owners who plan to sell in the next three years are waiting for mortgage rates to drop. It could be a while: last month, Fed Chair Powell said rate cuts were still “a couple years out.” |