Homebuyers continue to drop out of housing market amid competition

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KCRA Sacramento 12 July, 2021 - 03:27pm 28 views

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Buying a home of her own became a priority for Kelly Robinson during the pandemic, as she began to feel cramped in her Indianapolis apartment.

"Last fall having to stay home so much, that really made me decide that it is time to buy a house," she said. Among the top amenities she was looking for: outdoor space and more privacy.

Further motivated by record-low interest rates, Robinson set her sights to buy in the spring when she expected more properties would be available. It would also give her time to get her finances in order.

"But by the time I got pre-approved and started seriously looking at homes, the market got crazy," she said.

Robinson set a budget for $250,000. But in her market — the suburb of Greenwood — homes began selling within days, with as many as 10 competing offers, and sometimes going for $100,000 over the asking price.

"'Crazy' to me is not getting an inspection because you want to be number one on the homeowner's list," she said. "That is a risk I'm not willing to take. And having to make an immediate decision the day you see it? That is another thing that makes me really nervous."

So she decided to put the home search on ice and continue renting.

"There are so many aggressive shoppers out there and I'm not willing to compete with that," she said. "I need to be happy today, but I also want to be happy a year from now. If I overpay or don't get an inspection, that will cause bigger issues down the road."

Up against all-cash offers they can't match and a feeding frenzy on each house they visit, many buyers are dropping out of the market and opting to wait it out and reevaluate their options.

The housing market was on fire this spring, leaving many would-be buyers burned out. Low mortgage rates have been fueling demand, but there's also been a record-low inventory of available properties. That has pushed home prices to record highs, with some homes attracting multiple all-cash offers, and others selling for $1 million over the list price.

But home sales have fallen for the fourth month in a row, on a monthly basis, partially because there aren't enough homes to buy, but also because the competition and higher prices are turnoffs to those who can't afford to compete, according to a recent report from the National Association of Realtors.

"Clearly sales are moving down partly due to inventory shortage, but the affordability is squeezing some of the buyers out of the market," said Lawrence Yun, NAR's chief economist. "Homebuyers qualify for a mortgage based on their income, but with prices rising 20% or higher, it is simply pricing them out of the market."

Only 32% of consumers believe it's a good time to buy a home, according to Fannie Mae's Home Purchase Sentiment Index for June. That's a record low. High home prices were cited as the main reason people were pessimistic toward home buying. That sentiment was particularly strong among renters looking to buy for the first time, said Doug Duncan, senior vice president and chief economist at Fannie Mae.

"While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners," he said. "It's likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership."

Still, even in the face of tough buying conditions, many would-be homeowners remain intent on purchasing now, Duncan said, especially with mortgage rates still relatively low and a down payment ready to go.

"I'm encouraging my buyers to stay the course," said Corey Burr, a senior vice president at TTR Sotheby's International Realty in Washington, D.C. "They need to have a persistent confidence their dream home will become available and they can buy it. Just because it is difficult doesn't mean it is impossible."

It's true, buying a home is not impossible. Plenty of people are doing it. But more people have tried and still aren't able to buy. And there are limits to how much time and emotional energy buyers are willing to put toward being shut out of the market.

First-time homebuyers Steven and Laura Andranigian planned to move from their home near Monterey, California, to the Coachella Valley in southern California, where they have family and Laura got a job teaching elementary school.

Looking for a home that costs less than $500,000 has them chasing properties as soon as they are listed. Many times, the houses are gone before they can even make an offer. Twice they've been laughed at for asking for time to get a pre-offer inspection. They've lost out on five bids so far.

"You get told, 'Here are the 10 things you need to do to buy a house'" he said. "We did 20 of those. And it is still like, 'Well, you're not able to participate.' Because there are people who are flush with cash who also want to buy here now."

They had been saving to buy a home for years and have been looking for months. But now they realize that their purchase options are to buy something that needs work in an area they don't want to live, to wait for a new construction home and pay a premium for it, or to buy something over their budget.

"The only way to buy [a home that costs] over $500,000 is for my in-laws to gift or loan us the difference," said Steve Andranigian. "But that seems excessive for people who have stable, good jobs to get $200,000 from family. Even when you've done everything right you still need more?"

The Andranigians have decided to abandon their home search.

"We decided to rent while we wait for the housing market to settle or resolve itself," Steven said.

But getting a rental isn't going to be easy either. The most galling turn of events, he said, would be to have to rent a home they had put an offer on before.

They've already seen some homes that they bid on come back to market as rental homes right after closing. Even though a property like that would be the kind of home they would love to live in, it would pour salt in the wound to have to rent it after trying to buy it, he said.

"To have to talk to the landlord, and hear they were sitting on a ton of cash and they wanted to turn it into a rental while we are just trying to buy our first home would be really hard," he said. "But to find out the landlord is a hedge fund and it is owned by some faceless company? That may be worse. We don't want to rent the place. We want to buy."

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Read full article at KCRA Sacramento

Many homebuyers are dropping out of the market

CNN 12 July, 2021 - 09:06pm

Updated 1:30 PM ET, Mon July 12, 2021

Buying a home of her own became a priority for Kelly Robinson during the pandemic, as she began to feel cramped in her Indianapolis apartment.

Is it cheaper to buy or build a house?

MSN Money 12 July, 2021 - 09:06pm

For many prospective homebuyers, affordability is a big factor in determining whether to purchase a house.

But, looking at average home sale prices only tells part of what a house might actually cost: the type of house purchased, where it’s located, and many other variables could impact the price of owning a home. Whether an individual opts to build a house vs. buy a house, for example, could affect if they’ll end up paying more.

According to the National Association of Realtors, the median sale price of existing homes is $295,300. That price point is nearly $34,000 less than the cost of a new house. Because these numbers reflect all homes across the U.S., though, they only tell a partial story about whether it is cheaper to buy or build a house.

For those considering whether they’re ready to buy a house, it can be helpful to know the true cost of each option before making a choice.

Sales data suggests that it is often cheaper to buy an already built house than to build a brand-new one. But, when it comes to buying an existing home, the price paid to the seller may only reflect a portion of the actual cost of home ownership.

Even if an individual can afford the home listing price, there are often additional costs—like, home-buying fees and closing costs.

For pre-built homes, age is one factor. The older a house, the more likely it is to need some upkeep and extra care—generally speaking.

While some home upgrades may be superficial (painting, etc), other time-intensive repairs and improvements might be necessary to keep a home habitable, whether in the short term or in the years ahead.

Before buying an existing house, a home inspection conducted by a certified professional can help future homeowners to stay informed about the current state of the house—including whether any major repairs or structural improvements are needed.

Typically, the buyer is responsible for paying for a home inspection, which can add several hundred dollars to the purchasing costs.

If buying an existing home, it may be wise to have a professional identify any potentially costly problems, such as faulty wiring or older pipes, before finalizing the sale. Some buyers even choose to make their purchase conditional on a successful inspection, lest the review come up with any surprise extra expenses.

During the home buying process, an official inspection might be performed as soon as the seller accepts a buyer’s offer. With the seller’s permission, it can even be possible to set up a pre-offer inspection.

A pre-offer inspection may give interested buyer’s a clearer idea of anticipated costs with that specific property (and could be a signal that the seller is willing to negotiate).

Potential repairs might include anything from installing a new roof or drywall to fixing the furnace or hot water heater. Tweaks like these might quickly add thousands of dollars (or more) to what a buyer will pay in the long run (assuming the seller is not open to negotiating).

For house updates, a buyer may want to account for the costs of parts, supplies, and labor labor—tabulating how much extra expenses might end up totaling. Some repairs can also require work permits, which the buyer would typically pay to obtain prior to the start of any construction.

Though shag carpeting from the 1970s may not—technically—make a home unlivable, it can make it unlovable in the eyes of some.

As such, many future homeowners opt to make additional, costly improvements to make their new house feel like a home.

Other changes, such as converting one oversized bedroom into two smaller rooms, may be desirable for buyers with a growing family.

Whether it’s changing the flooring, applying a fresh coat of paint, or even putting on an addition, many buyers choose to make changes aimed at turning an existing dwelling into their dream house.

And, it’s worth noting that each change along these lines would add extra costs to the listed purchase price.

Even if a buyer can live with the previous owner’s debatable décor decisions or layout in the near future, it’s often worth evaluating the cost of future alterations when estimating the cost of buying a house—whether such changes are large or small (or medium or long term goals).

Even if repairs are not required right away, it can be useful to review the age of an existing home (along with that of its component parts).

Although buyers may not want to replace the roof at the time of purchase, mulling over the average lifespan of major home features (like roofing) can be beneficial. Some questions to chew on:

Here’s one extra maintenance detail to think over: Older homes may not be as energy-efficient as newly built houses, meaning that—without upgrades to existing systems—it could cost a buyer more each month to heat and cool the house. Such ongoing and future expenditures may, over time, offset any savings received early on from buying instead of building a new home.

Even with potential extra expenses up front or down the road, in some cases buying a pre-existing house can save buyers hassle and even money.

For instance, if a prospective home has been well-maintained and boasts modern features, it may be move-in ready as-is—minus the need to spend more than the agreed-upon price of the house, affiliated taxes and home-purchase fees.

In addition to reducing the stress associated with a move, buying a house that’s move-in ready with a short closing can reduce interim housing costs, such as rent.

On average, existing homes take 45 days to close —far less time than it might take to build a new house from start to finish. In practice, this can mean a buyer may start paying down the mortgage faster.

So, compared to buying an existing house, how can a buyer evaluate how much it might cost to build a new home? The average single family home costs $114 per square foot to build, according to data from the National Association of Home Builders (NAHB) Construction Cost Survey. But, that statistic is just a mathematical average—the individual cost can still vary greatly, depending on a home’s location, the builders chosen, property lot size, materials used and other variables.

The NAHB also estimates that construction costs amount to 61% of the average single family new home build (finished lot costs comprise about 18.5% of sale prices). Included in these costs are things like:

Put another way, if a new house costs $300,000 to purchase, $183,300 of that would go towards construction—including materials and labor.

On top of those costs, individuals interested in building a new home may also want to ponder the cost of interior finishes. According to the NAHB, interior finishes—things like, walls, stairs and doors—amount to slightly more than one-quarter of new home building costs.

While the actual amount will depend largely on a home buyer’s specific choices, based on this average, $76,200 of a $300,000 home would go towards interior costs, such as painting, trim, doors, plumbing fixtures, appliances, and lighting.

While on paper it might appear cheaper to buy a house than to build a new one, it can be helpful to look deeper than just the listing price.

On the up side, a brand-new house could require less maintenance and upkeep for years into the future.

In many newly built homes, items such as appliances, roofing and HVAC may be covered initially by manufacturer and construction warranties. In that case, were something to break (if under warranty), the out-of-pocket expense could be covered (and not on the buyer to shell out for).

But, some potential cons may exist for building a new home. According to the US Census data, new homes take an average of seven months to build from start to completion.

It also takes longer to move into a custom home than for move-in-ready ones—with owner-built homes averaging 12 months wait time for residents. So, not all buyers may want to wait around that long to move in.

With a built-from-scratch home, buyers could also run a higher risk of ballooning construction costs or extended delays, which might result in extra interim costs (like, rent or subleasing). While construction on the new home is being finished up, for instance, a buyer may need to pay for another place to stay.

Still, if a buyer has been house-hunting for a long while and hasn’t found the home that matches their search requirements, the chance to custom-design a house may, ultimately, be worth the added costs up front. And, for some, that option’s priceless.

So, whether it is cheaper to build or buy a house can come down to individual budgets, desired locations, and home amenities (or design). For different buyers, the main motivating factor may vary. 

Your home is oftentimes your most valuable asset. It’s not only a place where you and your family can congregate and enjoy your time together; it’s also an investment.

Let’s say, you want to either refinance your mortgage at a lower rate or sell it to try and make a profit. Or, perhaps you’re trying to purchase a new home. Before applying for refinancing, listing your house on the market, or buying a house, you’ll need to get a home appraisal.

A home appraisal is an objective and professional analysis of a home’s value. An appraisal consists of information based on different aspects including what’s in the home (like the floor plan, amenities, and how big it is), a visual inspection, real estate trends in your area, and how much nearby homes in your area sold for.

Generally, an appraisal will be completed when someone is buying, selling, or refinancing a home. It will tell a homeowner whether or not the price they’re putting on the home is fair based on the condition of the home, its amenities, and its location.

Home appraisals will let those buying a home know if a home is a good price. If you’re refinancing, it shows the lender that you, the borrower, aren’t receiving more money than the home is actually worth.

According to a National Association of Realtors study from January 2020, appraisal issues led to 18% of real estate contract delays, so it’s important to get the appraisal right the first time around.

The home appraisal cost is typically several hundred dollars, and the borrower will most likely be responsible for paying it. However, the seller will cover it in some circumstances.

For instance, they may want to get the appraisal and see what modifications they can then make to increase their home value when they’re ready to sell it, or if they’re going to sell their home to a family member, to guarantee that the parties involved are getting a fair price.

Most people can expect to pay at least $450 to $550 for a home appraisal, but it could be higher if depending on the specific property.

For example, if you live on a lake or you’re buying a home on a lake, you can expect the home appraisal cost to be more.

If the appraiser is inspecting a larger home and/or a bigger overall property, then the home appraisal cost will go up. The same applies to jumbo loans, which are usually given to borrowers purchasing big luxury homes.

The cost of a home appraisal covers things like the appraiser’s training, licensing, insurance, and expertise. It also covers the time it’ll take for the appraiser to assess nearby sales and market trends as well as conduct a visual inspection.

You’re paying for the appraisal report, which will show how the appraiser came to their conclusion on the price and information about your home.

At the end of the appraisal, if it comes up lower than the amount for which you want to refinance or sell it, then you may need to work out a new deal with your lender or purchasing party.

The home appraisal process may seem complicated, but trained appraisers will be able to explain it to you and guide you through every step.

Generally, the home appraisal process happens after an offer on a house is accepted and within a week after an inspector has toured the home if it is being sold. 

Sellers have the option, should they wish to pay for it, to do a pre-listing appraisal. This can prevent the seller from having to work out the price with every prospective buyer.

Generally, the lender will seek out a third-party appraisal management company to come up with an objective analysis of the home and the appraisal estimate.

The lender will determine the cost of the home appraisal, and usually the borrower will be responsible for covering the expense.

The actual appraisal can take as little as 15 minutes or up to several hours depending on how big and complex the home is.

The appraiser will usually bring a form to collect information about the home including things like measurements, nearby housing trends, the demographics of the neighborhood, the condition of your home, and how it fits in with your area.

The appraiser will also review things like the home’s location, quality of construction, parking situation, exterior condition, how old it is, its structure, the quality of the siding and gutters, and the square footage.

They will also research the appliances, health and safety factors, the number of bedrooms, bathrooms, and kitchens in the house and how old they are, and the code compliance.

The appraiser will usually take photos of the home as well as make notes. Homeowners don’t have to be there for it, but if they are present, try to avoid getting in the way when the appraiser is taking photos or interrupting them while they’re trying to concentrate.

The appraiser may ask you questions about what has been done with the home to get a more accurate report. If the homeowner doesn’t don’t want to be there for the appraisal, the real estate agent can fill in to answer questions that may come up during the appraisal.

After the appraiser finishes, they’ll put together a report, which is generally delivered within a week to 10 days–but it could always take longer.

Along with looking at information on recent sales nearby and market trends, the appraiser may need to check that you had permits to make upgrades, which could delay the process.

When you receive the report, it could be anywhere from less to 10 pages up to 100 pages long. It’ll show details about the home as well as local properties that are similar to it.

If the appraised value is around the same price as listed, then the sale could close shortly after that. If it’s lower than expected it may be necessary to get in touch with the lender to show them comparable homes in the same neighborhood.

One option could be to print out a list of similar homes in the community and show that they were valued at a higher price than your home. You may have the option to appeal the appraisal, just note you’ll likely need to support your argument and the appraiser may not change their appraisal.

Each lender may have different criteria for formally disputing an appraisal, so should there be an issue, contact the lender to review their policies. In most cases, only the lender can request a second appraisal.

You may not even need to contact the appraiser if you’re willing to negotiate with the buyer, seller, or lender. They may be flexible on the price; all you have to do is ask.

Before getting a home appraised, there are a few things you can do to help the process go smoothly.

First up, decluttering. Think things like storing clothes and items in closets and drawers, organizing clutter in storage bins, and taking donations to your local Goodwill or thrift shop.

Thoroughly clean the inside and outside of the home, including the yard. Break out the cleaning supplies or hire a professional cleaning team. The goal is for the house to be spotless.

It’s also a good idea to repair any cracks in the wall, paint over paint that is peeling, take loose nails out of the walls, and make any other visual repairs that may need attention.

Test the lights, faucets, ceiling fans, and security system, as well as confirming that the windows and doors open and close easily. Run appliances like the oven and dishwasher as well to guarantee there are no problems.

Other items to consider checking off your list might include trimming hedges, getting rid of cobwebs, cleaning the gutters, pulling weeds, and mowing the lawn.

Adding plants or flowers could help add some curb appeal to the house. If there is a patio and/or pool area, clean up any outside furniture and power wash the surrounding concrete, fences, and walkways.

Since the appraiser will be walking outside, avoid watering the grass on the day of the appraisal. This can help avoid mud or dirt being tracked through the house.

If you have pets, you may need to make a plan for them. Consider putting them in a designated room or taking them to a family member or friend’s home during the appraisal. Also, double check that there are no fleas or other insects in the house.

In terms of paperwork, consider writing down a list of all the upgrades that have been completed on the home and attach permits and receipts detailing how much it all cost.

It can also help to research comparable homes in the area; an agent will be able to help with that.

Right before the appraiser arrives, consider doing one last light cleaning.

Whether you’re buying, selling, or refinancing a home, a home appraisal is a key part of the process. Knowing what to expect with the process can help ensure it goes as smoothly as possible and could help you feel more comfortable with the process.

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Many homebuyers are dropping out of the market - Channel3000.com

Channel3000.com - WISC-TV3 12 July, 2021 - 01:30pm

Buying a home of her own became a priority for Kelly Robinson during the pandemic, as she began to feel cramped in her Indianapolis apartment.

“Last fall having to stay home so much, that really made me decide that it is time to buy a house,” she said. Among the top amenities she was looking for: outdoor space and more privacy.

Further motivated by record low interest rates, Robinson set her sights to buy in the spring when she expected more properties would be available. It would also give her time to get her finances in order.

“But by the time I got pre-approved and started seriously looking at homes, the market got crazy” she said.

Robinson set a budget for $250,000. But in her market — the suburb of Greenwood — homes began selling within days, with as many as 10 competing offers, and sometimes going for $100,000 over the asking price.

“‘Crazy’ to me is not getting an inspection because you want to be number one on the homeowner’s list,” she said. “That is a risk I’m not wiling to take. And having to make an immediate decision the day you see it? That is another thing that makes me really nervous.”

So she decided to put the home search on ice and continue renting.

“There are so many aggressive shoppers out there and I’m not willing to compete with that,” she said. “I need to be happy today, but I also want to be happy a year from now. If I overpay or don’t get an inspection, that will cause bigger issues down the road.”

Up against all-cash offers they can’t match and a feeding frenzy on each house they visit, many buyers are dropping out of the market and opting to wait it out and reevaluate their options.

The housing market was on fire this spring, leaving many would-be buyers burned out. Low mortgage rates have been fueling demand, but there’s also been a record-low inventory of available properties. That has pushed home prices to record highs, with some homes attracting multiple all-cash offers, and others selling for $1 million over the list price.

But home sales have fallen for the fourth month in a row, on a monthly basis, partially because there aren’t enough homes to buy, but also because the competition and higher prices are turnoffs to those who can’t afford to compete, according to a recent report from the National Association of Realtors.

“Clearly sales are moving down partly due to inventory shortage, but the affordability is squeezing some of the buyers out of the market,” said Lawrence Yun, NAR’s chief economist. “Homebuyers qualify for a mortgage based on their income, but with prices rising 20% or higher, it is simply pricing them out of the market.”

Only 32% of consumers believe it’s a good time to buy a home, according to Fannie Mae’s Home Purchase Sentiment Index for June. That’s a record low. High home prices were cited as the main reason people were pessimistic toward home buying. That sentiment was particularly strong among renters looking to buy for the first time, said Doug Duncan, senior vice president and chief economist at Fannie Mae.

“While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners,” he said. “It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership.”

Still, even in the face of tough buying conditions, many would-be homeowners remain intent on purchasing now, Duncan said, especially with mortgage rates still relatively low and a down payment ready to go.

“I’m encouraging my buyers to stay the course,” said Corey Burr, a senior vice president at TTR Sotheby’s International Realty in Washington, DC. “They need to have a persistent confidence their dream home will become available and they can buy it. Just because it is difficult doesn’t mean it is impossible.”

It’s true, buying a home is not impossible. Plenty of people are doing it. But more people have tried and still aren’t able to buy. And there are limits to how much time and emotional energy buyers are willing to put toward being shut out of the market.

First-time homebuyers Steven and Laura Andranigian planned to move from their home near Monterey, California, to the Coachella Valley in southern California, where they have family and Laura got a job teaching elementary school.

Looking for a home that costs less than $500,000 has them chasing properties as soon as they are listed. Many times, the houses are gone before they can even make an offer. Twice they’ve been laughed at for asking for time to get a pre-offer inspection. They’ve lost out on five bids so far.

“You get told, ‘Here are the 10 things you need to do to buy a house'” he said. “We did 20 of those. And it is still like, ‘Well, you’re not able to participate.’ Because there are people who are flush with cash who also want to buy here now.”

They had been saving to buy a home for years and have been looking for months. But now they realize that their purchase options are to buy something that needs work in an area they don’t want to live, to wait for a new construction home and pay a premium for it, or to buy something over their budget.

“The only way to buy [a home that costs] over $500,000 is for my in-laws to gift or loan us the difference,” said Steve Andranigian. “But that seems excessive for people who have stable, good jobs to get $200,000 from family. Even when you’ve done everything right you still need more?”

The Andranigians have decided to abandon their home search.

“We decided to rent while we wait for the housing market to settle or resolve itself,” Steven said.

But getting a rental isn’t going to be easy either. The most galling turn of events, he said, would be to have to rent a home they had put an offer on before.

They’ve already seen some homes that they bid on come back to market as rental homes right after closing. Even though a property like that would be the kind of home they would love to live in, it would pour salt in the wound to have to rent it after trying to buy it, he said.

“To have to talk to the landlord, and hear they were sitting on a ton of cash and they wanted to turn it into a rental while we are just trying to buy our first home would be really hard,” he said. “But to find out the landlord is a hedge fund and it is owned by some faceless company? That may be worse. We don’t want to rent the place. We want to buy.”

COPYRIGHT 2021 BY CHANNEL 3000. ALL RIGHTS RESERVED. THIS MATERIAL MAY NOT BE PUBLISHED, BROADCAST, REWRITTEN OR REDISTRIBUTED.

Homebuyers are finally catching a break as new listings rise and mortgage rates drop

CNBC 12 July, 2021 - 09:36am

For more than a year now, the housing market has been a perfect storm for sellers, but the winds may finally be shifting.

Strong demand and record-low supply are starting to ease, and mortgage rates are coming down off their recent highs. While home prices are still surging, these new market dynamics will likely take some of the heat out of those gains as well.

New listings of homes jumped 4% in the four week period ending July 4 compared with the same period one year ago, according to Redfin. They were up 3% from the same time in 2019. It was the first time new supply topped pre-pandemic levels.

The number of active listings is still down 32% from a year ago, but that's actually the smallest annual drop since early February. Active listings are now up 8% from their 2021 low in early March.

"Many buyers have backed away from the housing market and are waiting until more and better homes are listed," said Daryl Fairweather, Redfin's chief economist. "Buyers don't have the same sense of urgency that they did at the beginning of the year. They aren't racing to buy before prices increase, because asking prices have already increased and stabilized."

 A monthly housing sentiment survey in June from Fannie Mae found that 64% of respondents said it's a bad time to buy a home, up from 56% in May. On selling, 77% of respondents said it's a good time to sell, up from 67% in May.

Potential sellers had been holding properties off the market, not wanting people coming through their homes while the pandemic was raging. They were also concerned they wouldn't be able to find something else to buy.

Vaccines, as well as rising inventory, are giving them more confidence, not to mention that they can now sell for top dollar. A record 55% of homes sold above listing price in June, up from 27% the year before.

Home prices were up 15.4% in May compared with May 2020, according to CoreLogic. Prices, however, are projected by CoreLogic economists to increase 3.4% by May 2022, as affordability challenges hit some buyers and cause a slowdown in price growth.

"First-time buyers are hitting a wall in many places around the country as the pace of home-price rises outpace the benefits of lower borrowing costs. Younger and first-time buyers, including younger millennials, are faced with the challenge of having sufficient savings for a down payment, closing costs and cash reserves," said Frank Martell, president and CEO of CoreLogic.

Mortgage rates, while historically low, have been on a roller coaster lately, starting the year at a record low but then shooting higher at the end of March. Last week, they fell back again, and while they are expected to rise slowly over the long term, there appears to be no imminent fear of another spike.

"They [buyers] aren't racing to buy before mortgage rates go up, because rates have dropped back below 3% and are likely to stay low. With more new listings starting to come on the market, buyers who threw in the towel may want to look again because the market is tilting more in their favor," added Fairweather.

Consumers are also feeling better about the economy and their own personal wealth. That could inspire those buyers who do have the means to afford a new home but have so far chosen to remain renters.

"Despite the pessimism in homebuying conditions, we expect demand for housing to persist at an elevated level through the rest of the year," said Doug Duncan, Fannie Mae's chief economist.

"Mortgage rates remain not too far from their historical lows, and consumers are expressing even greater confidence about their household income and job situation compared to this time last year, when the pandemic had shut down wide swaths of the economy," Duncan said.

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12 housing markets expected to boom into 2022

National Mortgage News 12 July, 2021 - 06:28am

“I think [the industry forecasts] are being a bit conservative for the second half of the year,” Charley Clark, SVP and executive director of mortgage warehouse finance at TIAA Bank, said in an interview. “That's just based on our numbers and our experience. April, May and June performance for us were consistent with production from the second half of last year.”

“Multiple-offer situations are the proximate cause of a lot of value growth and that information transmits quickly to other real estate agents listing the next batch of homes for sale,” Tucker said in an interview. “But frankly, the best predictor of upcoming price appreciation is the most recent few months of price appreciation. There's momentum intrinsic to that time series that’s much more predictable than other prices, like the stock market for instance.”

Using a model that combines the historic price levels, current market values and supply conditions, Zillow forecasted the year-over-year home price growth by May 2022 in the 100 largest metro areas. From the Sun Belt to the West, local lenders from the top 12 housing markets in expected appreciation rates talk about what makes their cities ripe for a boom.

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