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monthly realtor confidence index It’s a key indicator of what real estate professionals are seeing in the local market and how the market is evolving month to month.of National Real Estate Association Research Group has been indexing since 2008, during a tumultuous time in the real estate market.
One such measure is who is entering the market. Since October 2022, more than a quarter of the market share of homebuyers will buy a home without a mortgage. Shares are collected monthly in the Realtor Confidence Index and include buyers who purchased primary homes, vacation homes and investors.
These all-cash homebuyers are happy to avoid rising mortgage rates that hit 7% in the fall of 2022 before falling to the current rate of 6.28%. The spring of 2022 had similar percentages of all-cash homebuyers, but he’ll have to look back at 2014 before seeing similar percentages.
Then mortgage rates were in the low 4% range. Months before the COVID-19 pandemic, the percentage of all-cash purchases hovered in his teens. Mortgage rates may be one factor, but they don’t tell the whole story. So what happened? Who pays all the cash for housing?
One factor is the multiple bidding scenarios that have occurred throughout the COVID-19 pandemic. Homebuyers made competitive offers for homes while inventory was becoming increasingly difficult to find. By March 2022, sellers will average 5.5 Offers.
Today the average is 2.7 offers. The buyer wanted to find the perfect property, so he was willing to give all the cash to the seller so that their offer was not subject to funding before interest rates rose.
moreover, Buyers have moved to more affordable prices You can buy a home with all your cash if you have a home equity from past real estate. Thus, a typical homeowner who has owned his home for 10 years: $200,000 home equity to trade.
The share of non-primary homebuyers is now 18%, up from a high of 22% in January 2022. At the time, housing inventories had fallen to historic lows, creating a favorable environment for investors. Investors entered the market to hold properties as short-term or long-term rentals or to resell homes.
Especially missing are first-time homebuyers, as these all-cash buyers and non-primary homebuyers have found success in today’s home market. Unfortunately, only 27% of first-time buyers last month. It’s not the highest we’ve seen during the 2010 first-time homebuyer tax credit, but it’s also not the historical standard of 40% for the annual homebuyer tax credit. Home Buyer and Seller Report Profile.
Especially during the First Home Buyer Tax Credit period, we had a lot more inventory than we do now. Unfortunately, with rising mortgage rates constraining the share of those who can afford to buy a home, hopes of more first-time buyers have yet to materialize as there is less competition in the market this year. I have not.
First-time buyers today need more home inventory to improve affordability. His low interest rate of 3% on mortgages won’t be seen in the near future. Rethinking existing spaces such as new construction, office conversions and vacant schools can be key so that buyers can afford to enter the market comfortably and sustainably.
This column does not necessarily reflect the opinions of the Editorial Board of HousingWire and its owners.
To contact the author of this article:
Dr. Jessica Lautz [email protected]
To contact the editor responsible for this article:
Brenna Nas [email protected]
