Booming U.S. housing market ‘finally offers hope’ to buyers and sellers, real estate economist says

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Home prices are up 14% from the same time last year, and mortgage rates have driven the average monthly payment up 50% over the same period, so affordability remains a concern major for people looking to relocate.

Nearly half (49%) of sellers said they plan to sell their home for $500,000 or less, with 15% aiming for $200,000 or less, according to a Tuesday report from real estate site Realtor. .com.

This year’s sellers are “looking to buy their next homes at more affordable prices,” the report notes, with more than half (53%) of sellers aiming to buy property priced at $500,000 and under, and 17 % looking for cost $200,000 or less.

About 29% of sellers are trading higher and 32% are making a sideways price move. (This is the first year Realtor.com has asked these specific questions.)

An encouraging sign

There are signs that the housing market is slowing down. New home sales fell in April for the fourth consecutive month to the lowest level since the pandemic due to high prices and soaring mortgage rates.

Mortgage rates jumped from just 2.75% in the fall for a 30-year fixed rate to over 5.25% in mid-May. Low mortgage rates made it easier for buyers to buy a home despite record prices.

“The sale price distribution is an encouraging sign for many buyers who found last year’s housing market very frustrating due to escalating prices,” said the survey of more than 3,000 buyers. and home sellers.

“An increase in the number of homes for sale at affordable prices would be good news for the markets,” he said, adding that nearly a third of homeowners plan to sell their home in the $500,000 range to $1,000,000.

George Ratiu, senior economist and head of economic research at Realtor.com, said the report “offers hope” to seller-buyers, who have been helped by the rise in remote working, which is showing staying power. significant.

“Many higher-level buyers are taking advantage of the newfound flexibility to use creative strategies, such as to move out in an area that offers homes that meet their family’s needs without breaking their budget,” he said.

(Realtor.com is operated by News Corp subsidiary Move Inc. and MarketWatch is a unit of Dow Jones, which is also a News Corp subsidiary.)

Double edged sword

However, the shift to remote working is a double-edged sword: working from home also explains more than half of the 23.8% national increase in house prices between 2019 and November 2021, a study concluded. economic study published last week.

This rise in property prices has pleased homeowners who have been able and willing to sell, but it has also caused heartache for millions of first-time buyers who aspire to get on the property ladder.

The median sale price jumped to $450,600 last month from $435,000 and hit an all-time high. The average home price was even higher at a record high of $570,300, highlighting that the majority of properties for sale are more upscale.

Additionally, nearly three-quarters of homeowners surveyed by Realtor.com who plan to sell their home in 2022 are also buying a home at the same time, Ratiu said, which he says adds “complexity to an already difficult task. “.

“As sellers are poised to cash in record equity when closing their homes, they are also facing higher prices and interest rates on their next home,” the report said.

The Dow Jones DJIA Industrial Index,
+1.68%,
S&P 500 SPX,
+2.08%
and Nasdaq Composite COMP,
+2.83%
all clung to positive territory early Wednesday afternoon as lingering fears of stagflation continued to worry investors.

(Jeffry Bartash in Washington, DC contributed to this report.)

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