Housing Market Archives

Housing Market Crash 2023: Will Real Estate Crash Again?

June 9, 2023 by Marco Santarelli

The US housing market is going through a crucial period in 2023 with conflicting opinions on the future of the market. The housing market has been experiencing a period of significant growth in recent years, with record-low mortgage rates and high demand pushing home prices to all-time highs. However, concerns about a housing market crash have started to surface, with some experts sounding the alarm that the US housing market may be on the verge of a crash.

In this article, we will explore the current state of the housing market, analyze the factors that may contribute to a potential crash, and assess whether a market crash is likely to occur in the near future. Some housing analysts are anticipating a more balanced market with single-digit annual appreciation while others fear a housing market crash or collapse in the near future.

Will the Housing Market Crash?

Inflation is soaring, and there is a fear of an impending recession in the country. However, the majority of real estate professionals do not believe that the housing market is in a bubble or poses a threat to the faltering economy.

Housing caused the worst financial crisis in recent memory. When shoddy mortgages crumbled, the nation was left with foreclosures, numerous new houses remained empty, and millions of Americans were suddenly underwater. Throughout the preceding century, the housing market met considerable barriers, but none, with the exception of the Great Depression of 1929, led to the decrease in home values that happened during the Great Recession of 2007.

It is also important to note that not all economic downturns dampen the real estate market. Despite the economic downturn, the home market and demand remained robust during the 2001 recession. The housing market has been subjected to a number of severe hurdles during the course of the previous century; but, with the exception of 1929's Great Depression, none of these challenges have resulted in a decrease in house values comparable to that of 2007's Great Recession.

The housing market's recent pandemic boom with skyrocketing prices, bidding wars, and an influx of investors has parallels to the previous time. However, this time, the majority of real estate professionals believe that the housing market won't crash or trigger a recession and may even assist the country's recovery. The mortgage sector has taken action against loans that ballooned in size or were intended for borrowers to fail. Only purchasers with consistent, verifiable income may now qualify for mortgages.

This has resulted in a significantly lower risk compared to the Subprime lending during the Great Recession of 2005-2007. The majority of bad mortgages have been eliminated, and lenders have stricter requirements on borrowers. The housing shortage is too severe with many more individuals trying to purchase and rent houses than there are available.

Year-over-year home price growth decelerated in 2022 as mortgage rates rose and housing affordability declined. With mortgage rates continuing to remain high, home prices are predicted to decline in the near term. However, experts do not anticipate the widespread unemployment that characterized the Great Recession and also believe that the recession will be quite brief if it occurs. This means fewer homeowners will be unable to pay their mortgages and those who are struggling may decide to sell their homes at a profit.

Many tapped-out homeowners are stepping back as mortgage interest rates rise into the 6%+ range or close to 7%. Some no longer qualify for mortgages big enough to finance the home they desire, others cannot afford the increased rates and prices, and some are taking a wait-and-see strategy out of fear of a recession. As a result, fewer properties are selling, bidding wars are subsiding, and bids beyond the asking price are decreasing. Numerous house sellers have been compelled to reduce their asking prices.

In the event of a recession, mortgage rates are anticipated to decline, which should reintroduce buyers who did not lose their jobs to the housing market. This will increase home sales and benefit the economy as a whole. The housing market can assist the nation in climbing out of a recession.

While the US housing market is experiencing changes in 2023, most real estate professionals do not believe that it will crash or trigger a recession. The mortgage sector has taken action to prevent a repeat of the Great Recession, and the majority of bad mortgages have been eliminated. The housing shortage is too severe, and the majority of Americans are hoping to avoid another 18 months of hardship. The housing market may even assist the nation's recovery in the event of a recession by increasing home sales.

Millennial Housing Demand: A Buffer Against Housing Market Crash

The housing market crash is a concern for many potential home buyers and sellers. However, the increased demand for homes from the millennial generation may act as a buffer against a potential crash. Millennials and Gen Z want more housing. The housing market is one of the most important indicators of economic growth, and it has been showing some signs of instability in recent years. However, the increased demand for homes from the millennial generation may act as a buffer against the housing market crash.

According to the National Association of Realtors' 2022 Home Buyer and Seller Generational Trends report, millennials now make up the largest percentage of home buyers at 43%, with Generation X buying the most expensive homes at a median price of $320,000.

The report also found that most buyers purchased homes in suburban areas and small towns, dispelling the myth that younger generations are flocking to city centers. Millennials, in particular, are more likely to use the Internet to find a home they will ultimately purchase, and 92% of them use real estate agents to help find the right home and negotiate the terms of the transaction.

The trend of younger generations purchasing homes for the first time is also on the rise, with 81% of younger millennial home buyers purchasing a home for the first time, and just under half of older millennial buyers being first-time buyers. Additionally, the percentage of millennial sellers is on the rise, increasing from 22% to 26% over the past year.

Many factors can contribute to the decision to buy or sell a home, and for all home buyers under the age of 57, the main driver was the desire to own a home of their own. Among those 57 and older, the desire to be closer to friends and family was the top reason, followed by the desire for a smaller home.

While younger generations tended to move shorter distances when relocating, the overall buyers expected to live in their homes for 12 years, down from 15 years last year. For younger millennials and the silent generation, the expected duration was only 10 years, compared to 20 years for younger boomers.

However, debt continues to be a significant barrier for many attempting to buy a home, and both Generation X and younger boomers delayed purchasing a home for five years due to debt, the longest of all age groups. Younger millennials had the highest share of student debt at 45%, with a median amount of $28,000.

Despite these challenges, the increased demand for homes from the millennial generation provides a buffer against a housing market crash. This demand is expected to continue to grow as more of the millennial generation reaches the traditional first-time buyer age, and with this trend, the housing market may remain stable even in uncertain times.

When Will the Housing Market Crash?

The current state of the real estate housing market, which is currently adjusting to record-high inflation and higher interest rates, is giving real estate companies and experts a run for their money, as the continued pressure of these forces is causing difficulties for those who make future predictions. What are the housing market crash predictions? Before answering this question, it is crucial to comprehend what causes real estate markets to fall in the first place.

First, it is essential to recognize that housing markets do not suddenly crash. Multiple variables will exert pressure on a market over time, eventually leading to its collapse. When home values climb too rapidly, a housing bubble arises. When there's demand and the capacity to buy, it may increase. When there aren't enough houses for sale to match demand, competition drives up prices.

When a housing bubble expands and pressure builds, the housing market may crash. Interest rate hikes slow the economy. Demand and jobs might drop. Oversupply promotes a buyer's market and cheaper pricing. The real estate market might then fall or stall down. How can you know how awful and how fast it will go better? It depends on how sustainable development was before the slowdown and how serious the causes are.

Many concerns remain about the housing market. Critically, while one of the biggest drivers of home price growth has been the lack of supply, higher rates are holding back both potential sellers and new construction. As such, there is no relief in sight for an improvement in the housing supply and the sustainable housing market that would come with increased inventory.

As we enter summer 2023, many are wondering whether the housing market is headed for a crash. According to recent data from CoreLogic, the answer may be no, at least for the time being. While there are signs of a slowdown in the housing market's year-over-year growth rate, the overall data and forecasts suggest that a crash is unlikely in 2023.

Home prices continue to rise, albeit at a slower pace, and market indicators indicate a generally positive outlook. However, regional variations and factors like affordability, inventory shortages, and economic uncertainties should be closely monitored. As always, it is advisable for prospective buyers,

Home Price Trends

According to CoreLogic's Home Price Index (HPI), home prices nationwide, including distressed sales, experienced a year-over-year increase of 3.1% in March 2023 compared to March 2022. On a month-over-month basis, home prices rose by 1.6% in March 2023 compared to February 2023. These figures indicate a positive growth trend in the housing market, showcasing the continued appreciation of home prices.

Price Forecast

The CoreLogic HPI Forecast suggests that home prices will continue to rise. It predicts a month-over-month increase of 0.8% from March 2023 to April 2023 and a year-over-year increase of 4.6% from March 2023 to March 2024. These forecasts indicate a positive outlook for the housing market, projecting further growth in the coming months.

Slowing Year-Over-Year Growth

Although home price growth has been consistent, there is evidence of a slowdown. In March 2023, U.S. home price growth fell to 3.1%, the lowest rate since 2012. This decline can be attributed to various factors such as the lack of affordability, inventory shortages, and a slower demand for higher-priced homes compared to median-priced homes. Additionally, concerns regarding inflation, job gains, wage growth, potential recession, and elevated interest rates have made some potential homebuyers hesitant.

Expert Opinions

Selma Hepp, Chief Economist for CoreLogic HPI, highlights the mixed signals from housing markets across the country. While prices in many large metros have shown signs of improvement, the lack of inventory in this housing cycle and the influence of remote working conditions on home prices in certain areas have been noteworthy. Hepp suggests that housing markets will continue to experience declining growth over the spring and early summer before picking up later in 2023.

Regional Variances

The CoreLogic HPI reveals regional variations in home price growth. States such as Arizona, California, Colorado, Idaho, Montana, Nevada, New York, Oregon, Utah, and Washington experienced annual declines in home prices. On the other hand, Vermont, Indiana, and Florida saw the highest year-over-year increases in home prices, indicating diverse trends across different regions.

Where Can the Housing Market Crash in 2023?

The CoreLogic Market Risk Indicator (MRI) plays a crucial role in assessing the health and stability of housing markets across the country. By analyzing various factors and trends, the MRI provides insights into the likelihood of price declines in specific regions.

One area that stands out is Provo-Orem, UT, which has been identified as having a very high risk (70% probability) of a decline in home prices over the next 12 months. This indicates a significant concern for potential homeowners and sellers in this region. It suggests that market conditions in Provo-Orem are such that there is a higher likelihood of prices decreasing compared to other areas.

Boise City, ID; Lakeland-Winter Haven, FL; Salt Lake City, UT; and Ogden-Clearfield, UT are also identified as regions with a high risk for price declines. This means that these areas have exhibited certain characteristics or market conditions that make them vulnerable to potential decreases in home prices.

These market indicators underscore the importance of cautious observation in these regions. Homebuyers and sellers in Provo-Orem, Boise City, Lakeland-Winter Haven, Salt Lake City, and Ogden-Clearfield should closely monitor the market conditions and make informed decisions based on the available data and expert advice.

It's worth noting that the high risk does not necessarily mean that a crash in home prices is imminent. It signifies a higher probability of price declines relative to other regions. Market conditions can change, and external factors such as economic shifts or policy changes can influence the housing market dynamics. Therefore, ongoing monitoring and consultation with real estate professionals who are familiar with the local market are crucial for making informed decisions.

If you are considering buying or selling a home in these high-risk areas, it may be prudent to evaluate your financial situation, consider the potential impact of a price decline, and consult with experts who can provide guidance tailored to your specific circumstances. This approach will help you navigate the market more effectively and make informed decisions based on the current conditions and potential risks associated with these regions.

A Housing Crash Not Coming, but Reduced Demand for Homes

The housing market has been severely impacted by rising interest rates as reflected in the increase in mortgage rates since 2022. This has led to a reduction in housing affordability, which has resulted in fewer people applying for mortgages. The demand for new and existing homes has dropped, home builders are pulling back on construction, and house prices have fallen from their recent peaks. The Federal Reserve's efforts to control inflation have caused a significant decline in house price affordability.

Mortgage rates have been steadily climbing throughout 2022, with the rate on a 30-year mortgage averaging 6.36% in December, more than double the rate of 3.1% in December 2021. The typical monthly mortgage payment, based on the median home price and a 20% down payment, rose approximately 55% between the third quarter of 2021 and the third quarter of 2022. This has driven a collapse in demand to purchase homes. With mortgage rates exceeding 7% for the first time in two decades in October, and set to remain high, compared to 2021, the housing market will continue to face pressure due to affordability.

As demand has dried up, home sales have followed. Existing home sales are down nearly 34% compared with a year ago, while new home sales are down 15.3%. Falling sales have driven new home inventories up and now stand at 8.6 months' supply in September. This has led home builders to become bearish on the market. Both nationally, and for all four reported regions, the NAHB Builders Confidence Index has dropped well below 50.

The collapse in demand and sales is impacting home prices, which were down from summer peaks by over 1% nationally according to Moody's Analytics Home Price Index. The lower end of the market has been more resilient, barely falling since peaking over the summer compared to a decline of 1.6% for the top third of the market. Lower-priced homes are expected to perform better than higher-priced ones given the underlying demand from young adults and the dearth of supply of starter homes.

The Covid-19 pandemic altered consumer preferences for housing. Combined with historically low mortgage rates, buyers drove up house prices to record levels, leaving the market more than 25% overvalued relative to its long-run fundamental value. Based on Moody's Analytics estimates, the national housing market was more overvalued in Q2 2022 than it was during the 2006 Housing Bubble. These valuation levels are not sustainable. Prices are expected to continue to fall 5 to 10% from their recent peaks by the beginning of 2025. The most highly overvalued metro areas will see the largest declines, including Boise, Phoenix, Austin, and Nashville.

It is important to note that a 7.5% decline is only a correction and not a crash. House prices will not crate like they did during the Great Recession. We expect that the FHFA purchase-only HPI will fall back to late 2021 levels in early 2025. Only this year's gains will be wiped out by declines. In 2025, when the next low is reached, we expect prices to be nearly 30% higher than they were at the beginning of 2020.

The underlying need for housing remains strong given current demographics, with recent estimates of a 1.5 million unit housing deficit given expectations for household formations and current vacancy rates. Further, despite recent anecdotal evidence of demand destruction through multigenerational and roommate living arrangements, vacancy rates as of November still indicate that inventory is tight.

For sellers, this could mean a potential decrease in their property value, while buyers may find this a good time to enter the market, as lower prices may provide better affordability. However, buyers should still exercise caution and not rush into a purchase, as the housing market is unpredictable, and prices may continue to fall in the short term. They should also ensure they can comfortably afford their mortgage payments, especially with interest rates remaining high.

Homeowners who are looking to sell their homes may need to be patient and may have to price their homes lower than expected to attract buyers. They should also be prepared for a longer time on the market due to the current slowdown in demand.

Overall, the housing market's decline is not unexpected given the rise in interest rates and overvalued prices. The correction is necessary for the market to return to sustainable levels, and it is not a sign of a housing market crash. As the underlying need for housing remains strong, the market is likely to rebound in the long term, and prices are expected to rise again in the future.

Conclusion

In conclusion, while the housing market may be experiencing a slowdown in year-over-year growth, the data and forecasts do not suggest an imminent crash in 2023. Home prices continue to rise, albeit at a slower pace, and market indicators provide a generally positive outlook.

The US housing market is going through a crucial period in 2023 with conflicting opinions on the future of the market. Some analysts fear a housing market crash, while others anticipate a more balanced market with single-digit annual appreciation. Although the market is experiencing changes, most real estate professionals do not believe that it will crash or trigger a recession.

The mortgage sector has taken action to prevent a repeat of the Great Recession, and the majority of bad mortgages have been eliminated. The housing shortage is too severe, and the majority of Americans are hoping to avoid another 18 months of hardship. Housing demand from Millennials and Gen Z is also expected to remain strong. While there may be a decline in demand and the pandemic-induced housing boom may slow down somewhat, there are no signs of a housing market crashing again in 2023.

Sources:

https://www.realtor.com/news/trends/recession-will-housing-market-survive/
https://www.noradarealestate.com/blog/housing-market-predictions/
https://www.corelogic.com/intelligence/u-s-home-price-insights/
https://cre.moodysanalytics.com/insights/research/q42022-the-outlook-for-the-housing-market/
https://www.forbes.com/advisor/mortgages/real-estate/will-housing-market-crash/
https://www.zillow.com/research/zhpe-q2-2022-not-a-bubble-31093/
https://www.freddiemac.com/research/forecast
http://www.freddiemac.com/research/forecast/20210715_quarterly_economic_forecast.page
https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx

Is it a Good Time to Buy a House or Should I Wait Until 2024

June 2, 2023 by Marco Santarelli

If you're looking to buy a house, you might be wondering if it's a good time to buy a house or if should you wait. While there are pros and cons to both options, several factors can influence your decision. This article delves into the components of the HPSI and explores the implications for the housing market.

Buying a house is a significant financial decision that requires careful consideration, especially with the ongoing changes in the housing market. The latest data from the Fannie Mae Home Purchase Sentiment Index® (HPSI) indicates a positive trend in housing confidence, as the index reached its highest level since May 2022, with a significant increase of 5.5 points to reach 66.8 in April.

This surge in the HPSI was primarily driven by consumers' more optimistic expectations of mortgage rates. Although the overall index remains lower compared to the same time last year, the increase in April suggests a temporary boost in optimism. However, affordability constraints continue to hinder homebuying sentiment, with only a small percentage of respondents indicating it's a good time to buy a home.

The HPSI is composed of six components that provide insights into consumers' attitudes toward the housing market. In April, all six components saw an increase, contributing to the overall rise in the HPSI.

Is it a Good/Bad Time to Buy a House?

The percentage of respondents who believe it is a good time to buy a home increased from 20% to 23%, while the percentage of those who consider it a bad time to buy decreased from 79% to 77%. This resulted in a net increase of 6 percentage points in the share of respondents who believe it is a good time to buy, indicating a slight improvement in buyer sentiment.

Is it a Good/Bad Time to Sell a House?

The percentage of respondents who believe it is a good time to sell a home increased from 58% to 62%, while the percentage who perceive it as a bad time to sell decreased from 40% to 38%. The net share of those who believe it is a good time to sell rose by 5 percentage points, suggesting increased confidence among potential home sellers.

ALSO READ: When is the Best Time to Buy a House?

ALSO READ: Will the Housing Market Crash?

Home Price Expectations

The percentage of respondents who expect home prices to rise in the next 12 months increased from 32% to 37%. Meanwhile, the percentage who anticipate a decrease in home prices increased slightly from 31% to 32%. The share of those who expect prices to remain the same decreased from 35% to 31%. As a result, the net share of those who predict an increase in home prices rose by 5 percentage points, reflecting a more positive outlook on future home values.

Mortgage Rate Expectations

One notable component that contributed to the overall increase in the HPSI was consumers' expectations of mortgage rates. The percentage of respondents who expect mortgage rates to decrease in the next 12 months rose from 12% to 22%, while the percentage anticipating an increase decreased from 51% to 47%.

The share of those who expect rates to remain the same also decreased from 34% to 31%. Consequently, the net share of respondents who believe mortgage rates will go down over the next year increased by 13 percentage points, indicating growing optimism about obtaining more favorable mortgage terms.

Overall, this positive sentiment is reflected in the slight improvement in the perception of a good time to buy a home and an increased belief that it is a good time to sell. Furthermore, respondents expressed a more positive outlook on future home prices, with a higher percentage expecting prices to rise.

However, affordability constraints continue to impact overall homebuying sentiment, as reflected in the relatively low percentage of respondents considering it a good time to buy a home. The primary reason cited for this sentiment is high home prices. Until affordability improves for a larger portion of potential homebuyers, home sales are expected to remain subdued compared to previous years.

Real estate professionals, investors, and policymakers should continue to monitor the HPSI and other indicators to understand the trends and dynamics in the housing market. Read the full research report for additional information.

Is It a Good Time to Buy a House or Wait Until 2024? — Source: Fannie Mae

Should I Buy a House Now or Wait?

Recent data from the Fannie Mae Home Purchase Sentiment Index® (HPSI) shows an upward trend in housing confidence, reaching its highest level since May 2022. While affordability concerns persist, the index suggests a temporary boost in optimism. The HPSI is composed of six components, all of which saw increases in April, including attitudes toward buying and selling, home price expectations, mortgage rate expectations, job loss concerns, and household income.

With more respondents considering it a good time to buy and sell, expecting home price increases, and anticipating lower mortgage rates, the overall sentiment indicates a favorable outlook for the housing market. The HPSI reveals positive shifts in consumers' attitudes towards the housing market, with more respondents viewing it as a good time to buy or sell a home.

Expectations of rising home prices and decreasing mortgage rates further contribute to the optimistic sentiment. While job loss concerns remained stable, household income improvements were reported by a higher percentage of respondents. Based on these indicators, now may be a favorable time to consider buying a house.

Ultimately, whether it is a good time to buy a house or not will depend on individual circumstances, such as financial stability, job security, and personal preferences. It may be helpful to consult with a trusted real estate professional to weigh the pros and cons and make an informed decision.

The Federal Reserve's Role

The Federal Reserve's actions can also impact the housing market. In an effort to combat inflation, the Fed has raised interest rates, which can affect the overall cost of borrowing money for a mortgage. While some investors are betting that the Fed will hold steady at its next meeting, others believe that interest rates will continue to rise.

Finally, inflation and economic uncertainty can also affect the housing market. With consumer prices rising across the board, it's becoming increasingly difficult to save money to buy a house. Additionally, economic uncertainty can make consumers hesitant to make significant financial commitments like buying a house.

Considering all of these factors, is it a good time to buy a house, or should you wait? The answer depends on your individual circumstances and priorities. Here are some factors to consider when making your decision. Your financial situation is one of the most critical factors to consider when deciding whether to buy a house. If you have a stable income, a healthy credit score, and a solid down payment saved up, now may be a good time to buy a house, especially if you plan to stay in the same location for several years. However, if you have unstable employment, poor credit, or a limited down payment, it may be better to wait until your financial situation improves before buying a house.

Market Conditions

The current market conditions also play a significant role in your decision. If housing prices and mortgage rates are both on the rise, you may want to wait until they stabilize before buying a house. On the other hand, if you find a property that you love and can afford, it may be worth buying now rather than waiting and risking the property becoming too expensive or someone else snatching it up.

Your Long-Term Goals

Finally, your long-term goals should factor into your decision. If you plan to live in the same location for several years and want to build equity in a property, buying a house now may be a wise choice. However, if you're uncertain about your long-term plans or prefer more flexibility, renting may be a better option. Renting allows you to move more easily, which can be advantageous if you're not sure how long you'll stay in a particular area.

Additionally, renting may be less expensive than buying a home in some markets. Ultimately, the decision to rent or buy a home is a personal one that depends on a variety of factors, including your financial situation, lifestyle, and long-term plans. It's important to carefully consider your options and consult with professionals, such as a real estate agent and financial advisor, before making a decision.

Regardless of whether you choose to rent or buy, it's important to remember that a home is a significant investment. It's important to take care of your property and make smart decisions about renovations and upgrades to ensure that you can enjoy your home for years to come.

As a borrower, it makes little sense to attempt rate timing in this market. Regardless of current interest rates, our best recommendation is to purchase a home when you are financially ready and can afford it. Remember that you are not forever bound to your mortgage rate. If interest rates drop significantly, homeowners can refinance to save money at a later date. Rising rates make homes more expensive for buyers, and, for prospective borrowers, steeper monthly mortgage payments. It will thereby reduce the demand for home purchases.

The Mortgage Credit Availability Index (MCAI) is an important measure that indicates the availability of mortgage credit at a given point in time. It takes into account various factors such as borrower eligibility criteria and underwriting standards. The Mortgage Bankers Association (MBA) analyzes data from ICE Mortgage Technology to produce the MCAI. In April, the MCAI showed a decrease in mortgage credit availability, indicating a tightening of lending standards.

According to the MBA's report, the MCAI fell by 0.9 percent to 99.6 in April. This decline suggests that lending standards are becoming more stringent. It is important to note that the index was benchmarked to 100 in March 2012. A decrease in the MCAI reflects a contraction in credit availability, while an increase indicates a loosening of credit. In this case, the decrease points towards a tightening of credit conditions.

Joel Kan, MBA's Vice President and Deputy Chief Economist, attributed the decline in mortgage credit availability to broader credit conditions influenced by recent challenges in the banking sector and an uncertain economic outlook. Reduced demand for specific loan programs, such as adjustable-rate mortgages, cash-out and streamline refinances, and those with lower credit score requirements, contributed to the contraction in credit availability.

Additionally, the government credit supply has decreased for the third consecutive month as the industry adjusts to significantly reduced origination volume. The expectation of a weakening economy later in the year also plays a role in the decreased availability of government-backed loans.

Is it a Good Time to Buy a House for First-Time Buyers?

For first-time buyers, the current housing market presents both opportunities and challenges. While there are factors that make it a good time to buy, such as low mortgage rates and a favorable sentiment toward buying a home, there are also affordability concerns to consider. The decision ultimately depends on individual circumstances and priorities.

On the positive side, historically low mortgage rates make homeownership more affordable, allowing first-time buyers to secure favorable financing. Additionally, the overall sentiment in the housing market, as indicated by the Fannie Mae Home Purchase Sentiment Index® (HPSI), suggests an optimistic outlook. With more respondents considering it a good time to buy and expecting home price increases, it may be an encouraging environment for first-time buyers.

However, it's important to weigh these factors against affordability challenges. Housing prices have been on the rise in many areas, which can make it more difficult for first-time buyers to enter the market. Affordability constraints, including down payment requirements and ongoing expenses like property taxes and maintenance, should be carefully evaluated.

Ultimately, the decision to buy a house as a first-time buyer should consider personal financial readiness, long-term plans, and local market conditions. Consulting with a trusted real estate professional and assessing individual financial capabilities can help determine if it's the right time to take the leap into homeownership.

Conclusion: The Best Time To Buy A Home Depends On You

Higher interest rates pose a challenge to existing homeowners looking to buy a new home at the same time as selling their current home. Existing homeowners may benefit from lower interest rates than those offered right now because they already have mortgages. Their monthly expenses could rise dramatically as a result of the purchase of a new property.

In other words, if you don't have a specific date in mind for when you want to buy a new property, you may be better off waiting till it does. Every potential buyer's best time to buy a property is different, and the greatest time to buy a house is not the same for everyone. It’s essential to consider your financial situation and understand how buying will impact your bottom line each month.

For many first-time homebuyers, it doesn't matter if loan rates are too high, if there aren't enough homes available, or if you don't have enough money in the bank. When the time is right to purchase a home, the time is right. First-time buyers can accomplish the American Dream of homeownership without a 20% down payment. The government offers several mortgage schemes with minimal or no down payment, as well as down payment assistance programs.

Sources:

https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey
https://www.realtor.com/research/december-2022-data/
https://www.bankrate.com/mortgages/todays-rates/
https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
https://www.bankrate.com/mortgages/rate-trends/
https://www.mba.org/news-and-research/research-and-economics/single-family-research/mortgage-credit-availability-index-x241340

Real Estate Housing Market Predictions & Forecast 2023

May 15, 2023 by Marco Santarelli

Experts are divided into the housing market predictions and forecasts for 2023. While there is no consensus on whether the historically tight housing market will loosen or not, the market has cooled significantly from its previous highs. Despite predictions of a housing market crash comparable to the Great Depression due to the pandemic, the market has remained stable. However, home prices are forecasted to continue rising at a slower rate, while home sales may continue to decline due to supply-demand imbalances.

While higher mortgage rates and recession fears have cooled the market from its spring highs, other factors may impact the market's pace and favorability for buyers or sellers. The market is shifting away from sellers to more balanced conditions. Buyers remain interested, keeping the market somewhat competitive, especially for attractive, well-priced homes.

The positive outlook is that most real estate firms do not predict a financial or foreclosure crisis on the scale of 2008, but they do expect housing fundamentals to return to the mean. Some of that moderation will be brought about by growing salaries, while some will be brought about by declining home prices. The housing market won't be overvalued after this correction is over.

ALSO READ: Real Estate Housing Market Trends for February 2023

The direction of mortgage rates in 2023 is likely to affect the decline in home values. Interest rates have a significant impact on the real estate market, as they influence mortgage payments, demand for housing, and housing prices. While home prices are still on the rise, the rate of growth has slowed down from earlier in the year. Despite this, buyers remain interested in the market, resulting in a somewhat competitive market, especially for well-priced and attractive homes.

However, there are still many concerns regarding the housing market, particularly regarding the shortage of supply and rising interest rates. The shortage of supply has been one of the main drivers of home price growth, but rising interest rates are discouraging potential sellers and new construction. This means that there is little hope for improvement in the housing supply and a sustainable housing market that would result from an increase in inventory.

The significant increase in mortgage rates since last year has made the already expensive housing market even less affordable. Home prices experienced a meteoric rise during the pandemic due to factors such as high demand, low supply, and record-low mortgage rates. However, the sudden increase in mortgage rates has dampened the market's growth and affordability, making it difficult for buyers to enter the market. Let us continue to find out about the latest housing market predictions and forecasts.

Real Estate Housing Market Predictions By Experts for 2023

There is little consensus among economists, mortgage firms, banks, and real estate firms regarding whether the historically tight U.S. housing market will reverse course in 2023. It appears that the US housing market is likely to experience a decline in home prices in 2023. However, the severity of this decline will likely depend on various factors, including the extent of the housing supply shortage, economic conditions, and location-specific factors. Let's take a detailed look at some of the notable predictions made by top companies in the industry.

Company	Optimistic/Pessimistic Market Predictions
Fannie Mae	Pessimistic
National Association of Realtors (NAR)	Optimistic
Goldman Sachs	Pessimistic
Wells Fargo	Pessimistic
KPMG LLP	Pessimistic
Freddie Mac	Mixed
CoreLogic	Mixed

According to Fannie Mae, it appears that the U.S. housing market will continue to struggle in 2023. The organization expects both new and existing home sales volumes to drop by 5.4% and 19.2%, respectively, after significant drops in 2022. This will likely occur due to high mortgage rates, which Fannie Mae believes will continue to deter potential buyers. Furthermore, the number of available homes on the market will remain low, as most homeowners with low fixed mortgage rates will not want to trade them in for higher rates, thereby limiting inventory levels.

Fannie Mae also expects home prices to continue to decline in 2023 and 2024. Following a 2.5% drop in the second half of 2022, the organization predicts a further 4.2% decline in 2023 and a 2.3% decline in 2024. However, this correction is considered mild, as national home prices are still projected to be up 29% by the end of 2024 compared to March 2020 levels. It is important to note that regional variations may occur in price movements despite national price trends.

According to the National Association of Realtors (NAR), home prices are expected to increase by 1.2% this year. This projection indicates a continued upward trend in the housing market. Additionally, NAR predicts that mortgage rates will plateau at about 6.4%.

Goldman Sachs and Wells Fargo have both recently made forecasts for the US housing market in 2023, and their predictions suggest a decline in home prices. Goldman Sachs is forecasting a more significant drop, with a projected decline of 7.6% from the peak, while Wells Fargo predicts a more modest decrease of 5.5%. Both banks attribute the anticipated drop to the current housing supply shortage, which has been a persistent issue in recent years.

It's worth noting that Wells Fargo also highlighted that there may be significant discrepancies in the extent of the price fluctuations depending on the desirability of a particular location. This could mean that some areas may experience larger price drops than others, depending on factors such as local economic conditions, population growth, and housing supply and demand dynamics.

The accounting firm KPMG LLP's forecast for the housing market in 2023 looks bleak. Existing home sales are predicted to drop by 23% from 2022, which would be a decrease not seen since 2007. The drop is expected to be driven by single-family home sales due to the limited supply and high prices. However, condos are predicted to fare better.

The number of purchase applications has dropped by over 40% from a year ago in February. Buyers are betting on rate cuts by the Fed as their mortgages reset in 2024, and they are using adjustable-rate mortgages (ARMs) to get into the few homes that are listed. Despite the spike in rates and erosion in affordability, millennials still make up over half of the purchase applications.

The share of those who have locked into ultra-low rates or paid off their mortgages has surged. Those homeowners have a natural hedge against escalating shelter costs and some have chosen to rent out their homes to cash in on the demand for single-family rentals, further constraining the stock of homes.

Home prices are predicted to fall between 7% and 10% depending on the measure, with the S&P CoreLogic Case-Shiller Home Price Index expected to drop another 8% in 2023, bringing prices to the still elevated levels of late 2021. Despite the rise in demand for rentals, rents have fallen more rapidly than home prices, and the Fed is counting on those declines to cool inflation. However, the tight labor market may place a floor under how much rents fall in the hottest markets, hence the Fed's focus on the labor market.

According to Freddie Mac's first-quarter housing outlook pulse survey of 2023, market confidence in the housing market has rebounded somewhat quarter-over-quarter, despite payment concerns remaining unchanged among both homeowners and renters. Specifically, 43% of respondents are confident the housing market will remain strong over the next year, up 9 percentage points from last quarter but down 15 percentage points compared to last year.

However, concerns about housing affordability persist, with 59% of renters and 28% of homeowners spending more than 30% of their monthly income on housing. Additionally, over half of the respondents (54%) expressed concerns about making housing payments, with 70% of renters and 44% of homeowners feeling this way.

In terms of market activity, only 18% of respondents indicated they are likely to buy a home in the next six months, while 14% of homeowners say they are likely to sell in the same period. About 16% of homeowners plan to refinance in the next six months. Overall, while market confidence has rebounded somewhat, concerns over housing affordability and payment continue to persist.

According to the CoreLogic Home Price Insights report, national home prices increased year-over-year by 5.5% in January 2023 compared with January 2022. However, on a month-over-month basis, home prices declined by 0.2% in January 2023 compared with December 2022. The CoreLogic HPI Forecast suggests that home prices will decrease on a month-over-month basis by 0.1% from January 2023 to February 2023 and increase on a year-over-year basis by 3.1% from January 2023 to January 2024.

While some states like Idaho, Montana, Washington, and Washington, D.C. saw annual declines in home prices, other states like Florida, Maine, and South Carolina saw significant year-over-year increases. Miami, in particular, experienced the highest increase in home prices at 17.3% year over year.

The CoreLogic Market Risk Indicator (MRI) predicts that Bellingham, WA is at a very high risk of a decline in home prices over the next 12 months, along with other cities like Bremerton-Silverdale, WA; Crestview-Fort Walton Beach-Destin, FL; Salem, OR; and Tacoma-Lakewood, WA.

Overall, while their national housing market may experience a slight decline in the short term, the forecast suggests that it will pick up again in the long run, with some states and cities continuing to experience significant growth. However, some areas face a risk of a decline in home prices in the next year.

Freddie Mac's Economic & Housing Research Group in its latest forecast to date has predicted mortgage rates dropping from an average of 6.8% in the fourth quarter of 2022 to 6.2% in the fourth quarter of 2023. The government-sponsored enterprise forecasts that home sales activity will bottom at around 5 million units at the end of 2023. Falling from 7 million to 5 million would be a decline of about 30% and put the contraction in home sales in line with other historical periods when interest rates increased.

As housing market activity continues to contract, Freddie Mac expects that it will lead to a continued increase in the months’ supply of homes available for sale from historically low levels last year. The loosening of the once incredibly tight for-sale inventory removes the intense upward pressure on home prices of the past two years. While fewer sales are increasing the months’ supply, that is partially offset by fewer new listings as high mortgage rates disincentivize existing homeowners from moving up or downsizing.

They expect house prices to decline modestly, but the downside risks are elevated. As the labor market cools off, housing demand will remain weak in 2023, potentially resulting in declines in prices next year. However, home price forecast uncertainty is wide due to interest rate volatility and the potential of a recession on the horizon.

Home purchase mortgage applications point to a continued contraction in home sales activity. Given the house price and home sales forecast, they estimate home purchase mortgage originations to be $1.9 trillion in 2022, slowing to $1.6 trillion in 2023. With mortgage rates expected to remain elevated, they forecast refinance activity to slow with refinance originations declining from $2.8 trillion in 2021 to $747 billion in 2022 and $310 billion in 2023. Overall, their forecast is that total originations will decline from the high of $4.8 trillion in 2021 to $2.6 trillion in 2022 and $1.9 trillion in 2023.

Housing Market Predictions For the Next Few Years

The housing market is far better than it was a decade ago. During the two years of the pandemic, the housing industry experienced a boom, with the most significant annual increase in single-family house values and rentals, historically low foreclosure rates, and the highest number of home sales in 15 years, totaling 6.9 million for the entire year of 2021. Over those two years, national home prices increased by around 33%.

The market was driven by record-low borrowing rates in 2020 and 2021, as well as a supply constraint due to underbuilding. The enormous demand from first-time buyers is almost as important as the limited new supply. The housing market is also being driven by exceptionally favorable age demographic trends. But soaring interest rates are making mortgage payments more expensive since last year and cooling the hot real estate market.

The overarching concern is whether or not the housing market will crash, and if so, when. The simple answer is that it will not crash anytime soon and we certainly don't see a housing market crash coming in 2023. Rising rates are cooling the market as some expected but the prices are still rising at a slower rate.

The current trends and the forecast for the next 12 to 24 months clearly show that most likely the housing market is expected to see a positive home price appreciation. In recent years, the price of homes has climbed dramatically. Many prospective buyers, especially those with limited financial resources, are eager to hear whether and when home prices will become more accessible.

Here is when housing market prices are going to crash. While this may appear to be an oversimplification, this is how markets operate. When demand is satisfied, prices fall. In many housing markets, there is an extreme demand for properties at the moment, and there simply aren't enough homes to sell to prospective buyers. Home construction has been increasing in recent years, but they are so far behind catching up. Thus, to see significant declines in home prices, we would need to see significant declines in buyer demand.

Demand declines primarily as a result of rising interest rates or a slowing economy in general. Ultimately, for rising interest rates to destroy home values, we'd need substantially less demand and far more housing supply than we presently have. Even if price growth moderates this year, it is extremely improbable that home prices will crash. Thus, there will be no crash in home prices; rather, there will be a pullback, which is normal for any asset class. The home price growth in the United States is forecasted to just “moderate” in 2023.

Affordability will be a concern for many, as home prices will continue to rise, if at a slower pace than the previous year. With 10 years having now passed since the Great Recession, the U.S. has been in the longest period of continued economic expansion on record. The housing market has been along for much of the ride and continues to benefit greatly from the overall health of the economy.

However, hot economies eventually cool, and with that, hot housing markets move more toward balance. Housing market forecasts are essentially informed guesses based on existing patterns. While the real estate pace of last year appears to be reverting to seasonality as we enter 2023, demand is not waning.

Increasing interest rates will almost certainly have a greater impact on the national housing market in 2023 than any other factor. While sellers remain in an advantageous position, price stability and the continuation of competitive interest rates may provide some much-needed relief to buyers this year. Housing supply is and will likely remain a challenge for some time as labor and material shortages, as well as general supply chain issues, delay new construction.

The housing market will continue to cool down, but not crash. Record-low borrowing rates, supply constraints, and first-time buyers drove prices up, but prices are expected to appreciate slower or remain flat for the next 12-24 months. Rising interest rates may lead to a pullback in prices and improve affordability. Nonetheless, it remains a concern as prices make it hard for some buyers to enter the market. Overall, the market will remain strong, but hot markets will move toward balance.

While the national housing market won't crash, several regional markets may see a decline in home prices in the coming years due to rising interest rates. Higher interest rates could lead to a decrease in affordability, which may result in fewer buyers in certain areas. As a result, regions that were previously experiencing rapid price growth may experience a slowdown or even a decline in home prices. However, it is worth mentioning that this would likely be a temporary setback, as long-term demographic and economic trends are still in favor of the housing market.

References

https://www.realtor.com/research/
https://www.realtor.com/research/blog/
https://www.bankrate.com/mortgages/mortgage-rates/
https://www.blackknightinc.com/
https://www.freddiemac.com/research/forecast
https://www.kpmg.us/insights/2023/march-2023-economic-compass.html
https://www.nar.realtor/research-and-statistics/housing-statistics/
https://www.corelogic.com/intelligence/u-s-home-price-insights/
https://www.zillow.com/research/daily-market-pulse-26666/
https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx
https://www.investopedia.com/personal-finance/how-millennials-are-changing-housing-market

Housing Market: Should You Buy a Turnkey Property or Fixer-Upper?

May 11, 2023 by Marco Santarelli

The current housing market means you’ll likely pay top dollar for a home that’s considered turnkey — immediately ready for you to move in. Plus, the competition is steep. Perhaps those two reasons are why 52% of American homebuyers are looking for a starter home or a fixer-upper rather than a forever home, according to TD Bank‘s First-Time Homebuyer Pulse, which polled buyers planning to purchase in 2022. If you’re struggling with whether to keep combing the housing market for a move-in-ready home that fits your budget or to take your chances with a fixer-upper, here’s the expert insight you need.

Pros of Buying a Fixer-Upper

Buying a fixer-upper can provide you with advantages that a turnkey home doesn’t offer. Consider the following.

Cheaper Taxes

“Fixer-uppers can be a great way to get a deal on a property and save money on taxes,” said Jeremy Luebke, founder of WeLoveLand. “In many cases, fixer-uppers are sold for less than the market value because the seller is motivated to move the property quickly. This can be a great opportunity for bargain hunters. Additionally, fixer-uppers often come with significant tax breaks. The government offers tax breaks for people who rehabilitate or redevelop properties, so if you’re planning to do major work on your fixer-upper, you may be eligible for some significant tax deductions.”

Flip Potential

“The big advantage to taking the risk on a fixer-upper is the equity you build while improving the value of the property,” said Doug Greene, owner of Signature Properties. “This is the flip potential that exists, while in a turnkey home you are essentially buying the property at full price (i.e., market value).”

Potential for Creativity

“An advantage of purchasing a fixer-upper is the opportunity to put money into the features of your house that are most important to you,” said John Riedl of Easy Cash Offer Florida. “Do you want a modern kitchen? What about a luxurious soaking tub? If you are purchasing a property that is move-in ready, you can find yourself subject to the taste and interests of the past owner.”

Riedl also pointed out that fixer-uppers give you a lot of control over the renovation process by selecting paint colors, floor materials, contractors, and anything else you desire.

Cons of Buying a Fixer-Upper

Time, money and effort are all required when it comes to getting a fixer-upper where you want it to be. Here’s more on the potential disadvantages of going this route.

Renovation Costs

“The cost of labor and materials is near its highest price ever, and if you are hiring contractors to perform work on your home, unless you have a crew on standby, it could be months before the work is done,” said Tony Grech real estate investor and lending expert with Luxury Mortgage. “Just like there is a shortage of home inventory that has driven prices up, there is a shortage of qualified tradespeople as well as a shortage in raw materials due to supply chain issues that stretch back to the beginning of COVID. So you save $20,000 or $30,000 on the price of the home, but it costs you $60,000 to perform the work that you want.”

Effort

Beyond the costs in labor and materials, renovating a home comes with some other headaches and risks,” said Brian Davis, real estate investor and founder at Spark Rental. “You have to navigate the treacherous waters of permits, which involves not just filing fees and dealing with the permit office, but also hassling with inspectors.”

Ryan Fitzgerald, owner of UpHomes also said that renovating a fixer-upper requires a lot of effort. “Renovations are time-consuming and stressful so make sure you’re up for the challenge if you decide to get a fixer-upper,” he cautioned. “If you don’t want to deal with the construction, managing contractors, and living in a home that isn’t finished, a fixer-upper may not be the best choice for you.”

Live Richer Podcast: First-Time Homebuying During Inflation: Is It Worth It?

Pros of Buying a Turnkey Home

While a home that’s ready to move in will likely cost much more than a fixer-upper, there are some definite advantages that are worth considering.

No Renovation Costs

“When you purchase a turnkey home, the price you see is the price you pay,” said Luebke. “There are no additional costs for things like landscape or certain home upgrades. This can be a big advantage when budgeting for your new home. You know exactly how much money you need to bring to the table, and there are no unpleasant surprises down the road.”

Minimal Effort Required

If you’re looking to move in and start enjoying your new home as soon as possible, turnkey home is a perfect choice. “Turnkey homes require much lower effort because you can move right in and start enjoying the home after you unpack,” said Ryan Fitzgerald, owner of UpHomes.

Cons of Buying a Turnkey Home

However, buying a turnkey home also comes with a few drawbacks. It’s up to you to decide if they are worth it.

More Expensive Taxes Upfront

While you can get a lower property tax rate by buying a cheaper fixer-upper, that’s likely not the case with a turnkey home.

“If you opt for a turnkey home, the municipality will have likely already caught up to the new assessed value by the time you move in,” said Greene. “It’s usually the sale of the property that triggers a property reassessment in the system.”

Flip Potential Is Nonexistent

“Buying turnkey is certainly the way to go if you have no desire to make repairs to a home and want it move-in ready,” said Jeff Shipwash, CEO of Shipwash Properties LLC. “Unfortunately, in today’s market, turnkey properties are at a premium. This means you will more than likely have strong competition and will be paying top dollar for it. This results in buying with little to no equity to spare.”

And without any equity to spare, there is no flip potential.

Limited Opportunities for Creativity or Customization

“The home might not be exactly what you want,” said Luebke. “Since the home has already been built, you may be limited in terms of customizations or changes that you can make. The home might come equipped with most, if not all, of the features and amenities that you desire, but there is always the chance that something will not be quite to your liking. This can be frustrating if you have specific ideas about how you want your new home to look and function.”

>>This article originally appeared on GOBankingRates.com.<<

Investors Are Buying a Record Share of Homes

May 10, 2023 by Marco Santarelli

Real estate is getting increasingly popular among investor groups. Investors bought more properties last year since home prices grew quickly and there were fewer homes for sale. They are eyeing growing prices because rental payments are also soaring, which encourages investors who want to rent out the houses they purchase. Many individuals who cannot locate a home to purchase are compelled to rent as a result of the housing supply constraint. In addition, investors who “flip” properties stand to make a substantial return as housing values increase.”

In the fourth quarter of the previous year, real estate investors acquired 18.4% of U.S. houses, according to Redfin. It was 12.6% a year ago and 17.4% in the third quarter. Although investor market share touched a record in the fourth quarter, the number of properties acquired by investors fell 9.1% from the third-quarter peak. In the fourth quarter, investors acquired 80,293 properties, up 43.9% year-over-year. Third-quarter investor house acquisitions were 75.3% cash. So, how are investors performing this year? Here's the summary of the latest Realtor.com® Investor Report for 2022.

Note: In their research, Realtor.com® analyzed deed data from January 2000 to April 2022 in 263 metro regions with more than 100 investor transactions in the year ending April 2022. They only considered single-family residences, condominiums, townhomes, and rowhomes, excluding multi-family buildings. They try to capture buy-and-hold investor purchases, excluding flippers. Some flipping activity is likely included as it is not always clear up-front whether an investor purchase is intended for a flip or buy-and-hold.

Investors Bought a Record-High Share of Houses in Spring of Last Year

Investor buyer trends 2022 — Source: Realtor.com®

Realtor.com® defines an investor as a buyer or seller that was/is an absentee owner and that has a name that includes the following: LLP, LP, LLC, GP, or TRUST. According to their spring 2022 report, the investor proportion of house sales has declined significantly from its all-time peak in February 2022 but is about double its 2014/2015 level. After dropping in the early months of the pandemic, investors' proportion of house purchases has increased over the past two years, exceeding non-investors' growth and reaching a new high of 9.7 percent in February 2022.

Nonetheless, investor purchases have declined substantially in tandem with non-investor purchases since February 2022, bringing their entire buy percentage to 9.5%. However, the current proportion of investment purchasers is approximately double the proportion at the same stage in 2014/2015. In April, investors bought 9.5% of properties sold, up 2.8% from the same period last year but down from February's 9.7% peak.

After months of surpassing non-investor purchasers, investor behavior has paralleled non-investor behavior since February. 2021 investor house purchases surged 64% over 2020 when the COVID-19 outbreak hurt investor activity. 2021 purchasing was up 39% from 2019 before the epidemic. While investor purchases were down in January and February, they were up 31% in April and 64% over the same period in 2019, while total sales were down 8% and up just 7%.

Investors' percentage in house purchases is near record highs. In April, investors bought 9.5% of properties, down from 9.7% in February but up by 2.8% year-over-year. This high percentage is driven by both investor purchases and non-investor purchasers, who bought 11% fewer properties in April than a year earlier. The investor proportion of house purchases is almost double what it was in April 2015 (4.8%), but its growth pace has slowed compared to February after 19 straight months of increase.

Their data shows investor purchases under a corporate name. Cash purchases are overrepresented in the statistics because small investor activity under individual names isn't included. Pre-pandemic standards for investors buying properties with cash have changed. In September 2021, 78 percent of investors bought with cash, comparable to 2009 to 2015.

Larger investors with greater equity may have increased demand. Another is greater iBuying activity during this time. Since September, investors' cash purchases have fallen while mortgage purchases have risen. With borrowing rates so high, this pattern may alter in the coming months.

Larger Investors Grew Their Share of Purchases in 2021 to 35%

Despite the fact that smaller investors continue to acquire the highest proportion of properties among the group of investors we've found, bigger investors have overtaken smaller investors in terms of activity increase over the past year. Smaller investors, defined as those who have acquired 10 or fewer properties since their data collection began in 2001, accounted for 64 percent of investor-purchased homes in July 2020, just after the commencement of the COVID-19 epidemic.

Nevertheless, as housing demand surged and rents climbed over the last year, bigger investors, defined as those who have acquired more than 50 properties since 2001, raised their proportion of investment purchases from 18 percent in July 2020 to 42 percent in August 2021. Since August, demand from bigger investors has decreased to 32 percent in April, but their sales share has stabilized above historical norms, grabbing market share from both small and medium-sized investors.

Large home investor sale increase is attributable to Opendoor, Offerpad, and Zillow iBuyer activity (prior to their exit from iBuying). iBuyer's significant investor stake was 30% in 2021. In 2022's first four months, it was 22%. Large investor purchases fell from 32% to 27% in April when iBuyer data was removed. Among non-iBuyer big investors, demand peaked in August and has subsequently decelerated.

While investors are buying a record number of properties, the margin between their buying and selling has shrunk since August. August 2021 saw investors buying 14,000 more properties than selling. By 2022, the margin was 2,300 dwellings. While investor purchasing surpassed selling in March and April, investor selling is up 24 percent from April 2018 and 28 percent from April 2019.

real estate investor contribution 2022 — Source: Realtor.com®

Charlotte Saw Greatest Growth in Investor Interest

Southern metros saw the most investment activity last year, followed by the West. Larger investors raised their purchases more than medium or smaller investors in the South and West. Investors bought 20% of Charlotte-Concord-Gastonia properties in the year ending April 2022. Branson, MO (19.5%), Birmingham-Hoover, AL (18.9%), Summit Park, UT (18.6%), and Memphis, TN (18.5%) had the highest investment activity.

Three of the top five metros where investors bought the most homes were in the South, which experienced the most investor interest and the most increase over the last year. In eight of the top 10 metros, investors paid less than the median price in April 2022. Summit Park, UT, and Branson, MO were outliers. In these eight metros, investors bought properties for 16% less. The median investor purchase price was $295,000 in April, 15% less than the median selling price overall and 10% less than the median investor house sold. In all 10 areas, investors bought more houses than they sold in April, vying with purchasers for limited inventory.

Metro Average Investor Purchase Shares and Change in Shares

Region	Average of 12 Months End April 2021	Average of 12 Months End April 2022	Average of yy percentage point change
Midwest	5.9%	7.6%	1.7%
Northeast	4.3%	5.7%	1.4%
South	6.6%	9.5%	3.0%
West	4.6%	6.8%	2.1%
Overall Average	5.7%	8.1%	2.3%

Not all major investor markets showed increased interest in the last year. Charlotte-Concord-Gastonia, NC-SC (+0.7%), Jacksonville, FL (+10.2%), and Birmingham-Hoover, AL (+8.8%) witnessed the most investor market share growth. Eight of the top 10 metros with the biggest growth in investor purchases over the past year are very cheap South metros with median list prices as or more reasonable than the typical home nationally.

The average April 2022 listing price in the top 10 metros where investors are rising was $372,000, compared to $450,000 nationally. Investors bought cheaper properties in all 10 markets. They bought properties 13 percent lower than April's median price. Except for Danville, VA, investors acquired more properties in April than they sold.

Source: https://www.realtor.com/research/investor-report-april-2022/