Housing Market Is So Hot That 66% Say Now Is A ‘Bad Time To Buy A House’
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The most recent data published Tuesday from S&P CoreLogic Case-Shiller showed that August home prices were up 19.8% year over year – the same record growth as in July, and up from June’s 18.7%.
CoreLogic contends, “2021 is going to be the strongest year for home sales since 2006.”
Sales of existing homes sales rose 7% in September, the National Association of Realtors said on Thursday.
The report added that 86% of homes sold during the month of September were on the market for fewer than 30 days; homes sold on average within 17 days of hitting the market.
There was an inventory of 1.27 million houses available for sale in September – down 13% to the same time last year.
Rising mortgage rates likely helped motivate buyers in September. Ever since near historic-lows in August – when the weekly rate for a 30-year mortgage averaged 2.77% – rates have been inching up. Wednesday’s rate for a 30-year mortgage is 3.20%, according to Bankrate. Economists expect mortgage rates to increase to 4% next year as the Federal Reserve attempts to counter rising inflation.
“The increase in sales in the latest month I would attribute to mortgage rates,” said Lawrence Yun, the NAR’s chief economist. “This autumn season looks to be one of the best autumn home sales seasons in 15 years.”
The high demand and low inventory have led to a seller’s market, which has caused the U.S. median home price to jump to $352,800 in September – a 13.3% increase from last year.
A whopping 66% of Americans say now is a bad time to buy a home – up from 63% the previous month, according to a Fannie Mae survey. Only 28% of respondents say now is a good time to buy a home.
“The survey’s story is also largely unchanged: Consumers feel it’s a bad time to buy a home but a good time to sell – and they continue to cite high home prices as the primary reason,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Across all consumer segments, renters and younger consumers were slightly more likely to indicate it’s a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking. We’re also seeing a softening in consumers’ expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation – including low levels of inventory and low interest rates.”
Ivy Zelman – CEO of housing research firm Zelman & Associates – advises people to avoid buying a house right now if they can.
“If you don’t have to buy, then wait,” Zelman tells Grow. “I would definitely say it’s a seller’s market.”
“Because it’s such a strong market, you have to be really careful,” she warns. “I would not be buying a home above appraised value.”
Zelman notes, “Home price appreciation is not sustainable at these levels. The housing market is going to run out of steam.”
Instead, Zelman recommends that homebuyers sit out this real estate market and wait at least a year.
“I would say over the next 12 to 18 months, we are going to start to see the market starting to show more moderation and more cooling, and you will be more likely to be in a more balanced buyer’s market,” she adds.
Zillow economist Kwame Donaldson agrees that the housing market will cool off.
“While home builders continue to face shortages, fiscal and monetary policy is less favorable for buyers, and sellers are encountering more resistance,” Donaldson stated. “Compared to August, homes took a little bit longer to sell in September and the for-sale inventory inched higher. In other words, though extraordinary market conditions pushed house prices skyward between the Spring of 2020 and the Summer of 2021, the latest signs indicate that the market is relenting. And while house price appreciation will remain elevated for the next several months, further acceleration is unlikely.”