You can feel it in the air! Fall 2022 has arrived, bringing lower temperatures and a cooling down of the real estate market. After the blazing housing market during the pandemic, rising interest rates have cooled down the real estate frenzy. But that’s not necessarily bad news for buyers.
As the housing market heated up, many would-be homeowners found themselves unable to purchase due to multiple cash offers pushing winning bids too high. Now with mortgage rates rising since January 2022 to 7.04%, prices are starting to edge down in most housing markets.
Where’s the good news you ask? According to Thersa Ghilarducci’s article “Looking to Buy a House? It’s Not the Worst Time” published in Bloomberg October 15, 2022, “Buying an asset when the price is falling is generally a good thing. Buying a home now when mortgage rates are high and housing prices are falling means as mortgage rates stabilize or even drop, your house value will more likely inflate than if prices were rapidly increasing and mortgage rates were increasing. Rising mortgage interest rates and a potential recession may seem like bad news, but these trends could benefit would-be homebuyers by cooling demand and dropping prices further, especially if the buyers are confident they won’t lose their jobs and income.”
Ghilarducci further explains, “Of course, a would-be home buyer must consider other important criteria besides housing prices before buying a house. Other important decision factors include having at least 20% for a down payment; whether you will live in the property for more than five years; and whether your monthly payment will be lower than 30% of your gross income.”
Although purchasing a house when interest rates and inflation are higher may not be ideal, this may be the perfect opportunity to consider buying if you can afford it. Not only can you avoid the bidding war that forced many buyers out of the market, you can always refinance once the Fed lower interest rates which some experts predict can be as soon as in 2023.
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"(《世界人权宣言》) U.S. median rental price grew 9.8% year-over-year to $1,607 – 15.5% higher than monthly starter home payments in 24 of the 50 largest U.S. metros
SANTA CLARA, Calif., – As rents continue to hit new highs and mortgage rates remain low, buying a starter home now costs less per month than renting a similar-sized unit in 24 of the 50 largest U.S. metros, according to the Realtor.com® Monthly Rental Report released today. The top markets where it’s more affordable to buy a starter home versus rent one include: Birmingham, Ala. (33.1% lower), St. Louis, Mo. (29.4% lower), Pittsburgh (27.7% lower), Orlando (25.9% lower) and Cleveland (25.7% lower).
Nationally, rents continued rising at an unusually fast pace in July, up 9.8% over last year and 12.2% since 2019. All unit sizes tracked by Realtor.com® posted rent gains and hit new highs: Two-bedrooms at $1,802 (+10.9%), one-bedrooms at $1,495 (+9.5%) and studios at $1,315 (+5.6%).
“Rents hit new highs in 40 of the 50 largest U.S. metros this July and grew at an almost double-digit pace – the fastest yearly rate we’ve seen in the last 18 months,” said Realtor.com® Chief Economist Danielle Hale. “Sky-high rents and historically low interest rates have made the monthly cost to buy a starter home lower than renting one in nearly half the markets across the U.S. While this is good news for first-time buyers in these metros, there are plenty of other factors to consider when deciding whether to become a homeowner, including making sure it’s the right time for you and your family. But if the monthly costs have been holding you back, data suggests it’s worth exploring in many markets, and although it’s still hard to find entry-level homes, we are seeing more smaller homes coming on the market.”
Hale added, many of July’s highest rent gains were seen in secondary markets where rental demand has exploded during COVID, driven in part by remote work enabling employees to escape crowded, expensive big cities – at least temporarily. With the future of remote work uncertain for many Americans, first-time homebuyers saw less of a frenzy than renters in a number of July’s highest-priced rental markets. This has helped keep monthly starter home costs an average 15.5% ($216) lower than rents in nearly half of the 50 largest U.S. metros. (See methodology below.)
First-time homebuying is relatively more affordable in hot rental markets
In the top 10 metros that favored first-time homebuying over renting in July, monthly starter home payments were an average 24.3% lower than rents, driven in part by lower median listing prices ($192,000) than the national average ($297,000). The types of starter homes for sale also play a key role in monthly payments, with active inventory in these buyer-friendly metros including nearly two times the share of single-family starter homes (56.1%) than in condo-heavy markets that favor renting.
In July, the top 10 markets that favored buying over renting were: Birmingham, Ala. (33.1% lower), St. Louis, Mo. (29.4% lower), Pittsburgh (27.7% lower), Orlando (25.9% lower), Cleveland (25.7% lower), Tampa (22.9% lower), Baltimore (20.5% lower), Indianapolis (20.4% lower), Virginia Beach (19.2% lower) and Riverside, Calif. (18.5% lower).
Many of these metros also posted sizeable rent gains over last year in July, led by Riverside (+29.7%), where the median rental price of $2,230 was 18.5% ($413) higher than starter home payments, at $1,817 per month. Even with the surge in prices, Riverside rents were relatively lower than in nearby Los Angeles ($2,742), making the metro an attractive option to big city renters looking to save during COVID. Compared to Los Angeles, first-time homebuyers in Riverside saw 51.5% lower asking prices and nearly three times the share of single-family starter homes, at 75.1% of entry-level inventory in July.
Renting beats out buying in big tech cities with rents yet to recover from COVID
Typically some of the nation’s most expensive housing markets, big tech hubs largely favored renting over buying a starter home in July, partly attributed to higher condo HOA fees. Among 0-2 bedroom homes in these top 10 cities, over seven-in-ten (71%) were condos, on average, compared to 58% nationwide, while median HOA fees of $334 among homes that had this fee were 27% higher than the U.S. median ($263).
Seven of the top 10 markets where monthly starter home costs were higher than rents are tech-heavy areas, including: Austin, at 79.2% higher; San Jose, at 47.5% higher; San Francisco, at 44.4% higher; Seattle, at 44.2% higher; Boston, at 40.9% higher; Los Angeles at 39.4% higher; and New York, at 32.0% higher.
While rental prices have surpassed pre-COVID levels in the majority of U.S. markets, rents in many of the biggest tech cities have yet to catch up to historical peaks. Among the 50 largest U.S. markets, the only four where rents declined from last year in July were all big tech hubs: New York (-6.1%), Boston (-3.7%), San Francisco (-2.9%) and Chicago (-1.4%).
Leading the list of metros that favor renting by a wide margin, at $1,228 higher monthly starter home costs than rents, Austin is currently one of the nation’s most competitive housing markets. While costs like median HOA fees are relatively lower in Austin compared to other big tech cities, at $104 versus $1,222 in New York, first-time homebuyers are competing for limited affordable options, with 0-2 bedroom home inventory down 59% year-over-year and prices up 17.5% to a median $431,000 in July.
“Emerging tech hubs like Austin have seen a surge in housing demand in recent years as more Silicon Valley companies have opened or expanded offices in these areas. Relocating employees, including many millennials, can see their housing dollars go much further, with rental costs roughly half as high as in San Francisco and San Jose and starter home costs more than a third lower. With growth expected to continue in Austin, there’s a premium on real estate, but California transplants may find that relative affordability creates first-time homebuying opportunities,” Hale said.
Realtor.com®July 2021 Rental Data – Top 10 Markets that Favor Buying Over Renting
Realtor.com®July 2021 Rental Data – Top 10 Markets that Favor Renting Over Buying
Realtor.com®July 2021 Rental Data – 50 Largest Metropolitan Areas
Methodology
Rental data as of July 2021. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. National rents were calculated by averaging the medians of the 50 largest metropolitan areas.
The monthly cost of buying a home was calculated by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. Memphis for sale data was excluded while inventory data is under review. Monthly buying costs assume a 5% down payment, with a mortgage rate of 2.87%, and include taxes, insurance and HOA fees. Typical market-level monthly HOA fees were included in the overall monthly cost of buying, and the median was not conditional on the presence of an HOA fee. This means that the typical HOA fee included reflects both the fees themselves as well as the prevalence of HOA fees in the cost of local starter homes. All else equal, areas where more homes have HOA fees will reflect a higher HOA fee inclusion.
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 20 years ago, and today through its website and mobile apps is a trusted source for the information, tools and professional expertise that help people move confidently through every step of their home journey. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today’s on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit Realtor.com.
CHICAGO – (July 20, 2021) — ShowingTime, the residential real estate industry’s leading showing management and market stats technology provider, found that showing activity slowed during June compared to prior months, but remained hyperactive during the first few days listings go on the market in cities across the country.
According to the ShowingTime Showing Index®, 64 markets still averaged double-digit showings per listing during the month, led again by Seattle and Denver. That was down almost half from May, when 113 markets averaged double-digit showings per listing, and down from a very busy April when 146 markets were in double digits.
“Buyer demand remains healthy,” said ShowingTime President Michael Lane. “Showing traffic is still above last year’s levels – other than in the Northeast, where it is down 3 percent from last year – though we saw a quick month-to-month drop in the number of showings per listing in June, showing an uncharacteristically rapid slowdown in real estate demand coming into the summer. This is likely to cause an increase in inventory levels in the coming months and ease the upward pressure on real estate prices that has pushed them to historic highs over the last 12 months.”
Though the volume of showings declined from prior months, the first five days listings are active remain critical for buyers, when showing calendars tend to fill up quickly. Listings in Riverside and Bakersfield, Calif., Buffalo and Rochester, N.Y., Los Angeles, Raleigh, N.C., and Grand Rapids, Mich., each averaged more than 30 showings just in the first five days.
Buyer demand remained strong enough in June to drive year-over-year jumps in showing traffic in the South (20.5 percent), the West (14.4 percent) and the Midwest (14.1 percent), leading to a 7.8 percent jump year over year in activity throughout the U.S. overall. The Northeast Region, however, saw a drop of 3.2 percent, the first drop in showing activity in any region since April 2020 when real estate continued to grapple with the effects of the pandemic.
The ShowingTime Showing Index is compiled using data from more than six million property showings scheduled across the country each month on listings using ShowingTime products and services. The Showing Index tracks the average number of appointments received on active listings during the month.
ShowingTime is the residential real estate industry’s leading showing management and market stats technology provider, with more than 1.5 million active listings subscribed to its services. Its products are used in 370 MLSs representing 1.4 million real estate professionals across the U.S. and Canada. 联系方式 us at research@showingtime.com.
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