With the change of the seasons, brings changes to the real estate market. Welcome to our September real estate market update, where we provide you with valuable insights to what is happening this fall.
Homebuyers Can’t Seem To Win
Although home prices were just beginning to dip, they are now rising again. This is due to the number of available homes remaining dangerously low. Houses are too expensive for buyers to buy and sellers are reluctant to sell. Most sellers are also buyers. They do not want to buy a new home at a much higher rate than the ultra low mortgage rates they secured during the pandemic. So they’re staying put until rates come down. As a result, the housing inventory crisis is getting worse. House prices are remaining high as buyers compete over a limited selection of residences for sale. Leading to bidding wars and offers over the asking price.
Builders Are Offering Lower-Cost Options
While affordability of housing is remaining a challenge, many people are working with their real estate agents to find less expensive homes. Newly built homes are making up a historically large percentage of available inventory today, and buyers are gravitating towards new homes in the lower price range.
Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. Builders are picking up on this trend and responding to this shift by building smaller homes in order to meet lower price points.
“. . . it is creating opportunities for people to be able to afford an entry-level home in an area. . . . if you get that size down, that automatically will make it a more affordable home. The [builders] that are decreasing [size] the most are probably the ones that try to build more of an affordable product.” – (Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting)
While predictions indicate a gradual decline in mortgage rates as inflation subsides, waiting might not be the optimal choice. Mortgage rates are inherently unpredictable. Concurrently, home prices are once again on an upward trajectory. By making a move now, you can avoid the risk of rising home prices for your next purchase. Moreover, if rates do indeed decrease, refinancing remains a possibility. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), states:
Airbnb Restrictions Causing Debate
The city of New York has imposed strict new rules pertaining to how Airbnb will operate in the city. From now on, all New York Airbnb hosts must register with the city and only those who live in the place they’re renting—and are present when someone is staying—can qualify. Due to these new policies, the number of available Airbnbs in New York dropped by the thousands.
Along with the noise, trash, and danger short-term rentals have brought, it is also believed that they are making the housing crisis even worse, pricing local residents out of their own neighborhoods. Some argue that these new restrictions will mean more homes are available to locals to rent or buy at more reasonable prices, while others believe it forces individual homeowners to lose out on much-needed income and discourage tourism that many local economies rely on.
Sources: Keeping Current Matters, Realtor.com, Wired.com
