Gta Real Estate Market News
Cecile Lilien
Nonetheless, experts say the housing market will only see renewed momentum once mortgage rates drop enough to ease buyer affordability obstacles and incentivize homeowners locked in at low rates to move.
Unfortunately, hopeful buyers continue to see a delay in this yearned-for transformation, thanks to several ongoing headwinds. One is inflation taking its sweet time cooling off, further delaying the Federal Reserve from cutting the federal funds rate.
Of course, mortgage rates would need to cool off, which seems promising given the recent declines. The average 30-year fixed mortgage rate remained consistent in July, coming in at 6.78% for the week ending July 25, a minor increase from 6.77% the previous week.
Following years of litigation, the NAR has agreed to pay $418 million to settle a series of high-profile antitrust lawsuits filed in 2019 on behalf of home sellers. The settlement received preliminary court approval in April. A judge is expected to grant final approval in November. Meanwhile, NAR announced that the new required practices will go into effect on August 17.
The required new rules prohibit broker compensation offers on multiple listing services (MLS), the private databases that allow local real estate brokers to publish and share information about residential property listings.
High mortgage rates and sticky inflation are largely to blame for the dampened outlook for new construction, with builder confidence sliding from 45 to 43 in May, according to the most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the second consecutive month of downward movement and negative sentiment.
Permits for new single-family homes fell to their lowest seasonally adjusted annual rate since June 2023 amid builder blahs, dipping 2.9% month-over-month in May, according to the latest data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). Housing starts were down 5.2%, and completions slid 8.5% from April.
Existing-home sales dipped 0.7% in May, according to the latest report from NAR, marking the third straight month of declines as ascending mortgage rates and home prices deterred potential buyers. In May 2023, home buyers could get a mortgage rate well over half a percent lower at a time when homes were also more affordable.
One upside to fewer sales is that resale inventory has been loosening since December. The latest NAR data shows inventory growing 6.7% month-over-month, logging 1.28 million unsold homes at the end of March. Still, only 3.7 months of inventory remain at the current monthly sales pace. Most experts consider a balanced market between four and six months.
Amid mortgage rates hovering close to or above 7%, May sales of newly constructed single-family houses plunged 11.7% 4.7% compared to April and 16.5% from a year ago, according to the latest U.S. Census Bureau and HUD data.
A pending home sale marks the point in the purchase transaction when the buyer and seller agree on price and terms and is considered a leading indicator of a closed existing-home sale within the next one to two months.
Even so, with fewer homes selling, Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes, sees a price collapse within the realm of possibility, especially in markets where real estate investors scooped up numerous properties.
Most experts do not expect a housing market crash in 2024 since many homeowners have built up significant home equity. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
With over three years of experience writing in the housing market space, Robin Rothstein demystifies mortgage and loan concepts, helping first-time homebuyers and homeowners make informed decisions as they navigate the home loan marketplace. Her work has been published or syndicated on Forbes Advisor, SoFi, MSN and Nasdaq, among other media outlets.
All real estate is local and every market is unique. To help REALTORS and other housing market analysts get the most out of the plethora of data that is available, NAR Research produces a series of Local Market Reports (LMRs) which provide insights into the fundamentals and direction of the nation's largest metropolitan housing markets. Each report evaluates a number of factors affecting home prices, including:
Every attempt is made to include the best data possible. If one data source is not available for a particular metro area, a second-best solution is substituted. For instance, the Bureau of Labor Statistics (BLS) does not provide employment figures for all metro areas from its Establishment Survey. Where this data is not available, we have substituted figures from the BLS's Household Survey.
In the years ahead, companies with business models that support remote work will keep reducing their office footprint to save on rent. Going fully remote also may help companies win in the battle for talent, as companies that offer remote positions have access to a wider talent pool, which allows them to recruit better workers at more affordable wages. Such economics may be too compelling for them to reverse course and lease office space like before.
Not only is there less of it, credit has become more expensive and stringently underwritten. In lieu of credit, borrowers have been holding on to their existing debt, which is reflected in the increasing volume of outstanding CRE debt. This has enabled banks to grow their books of business despite making fewer new loans.
Property owners and managers now find themselves subject to growing government regulation and ESG (environment, social and government) mandates. In addition, city governments in some CRE markets have enacted regulations in recent years mandating regular energy audits and requiring commercial buildings to implement energy-saving measures.
Aside from rising insurance costs, the increasing correlation between real estate assets and sustainability performance is another key reason why the industry should plan its next moves with sustainability in mind. Over the years, CRE investors and fund managers have faced complex and difficult choices in considering how exactly to move forward with sustainability. Now, decarbonization and energy efficiency, indoor environmental quality, climate resilience and related issues are becoming increasingly urgent as extreme climate events mount and the risks and costs to owners rise. Going forward, investors will likely be more risk-averse and will perform expanded due diligence to understand the risks and potentially alter their investments.
The current housing affordability crisis, however, has been more favorable for renters of late as rent growth nationally is flat or minimal, after peaking in early 2022. This is the result of healthy additions to supply, including apartment construction, which is on pace to add over 460,000 units in the US this year, on top of over 700,000 units since the start of the pandemic.
In addition, some investors we interviewed for Emerging Trends point to the potential for AI to generate a new source of demand for office space, particularly in traditional tech markets like San Francisco, where much of the venture capital and AI employment is based.
To help combat misinformation and other risks, leaders should thoroughly research the topic and learn how to make responsible AI part of their larger AI strategy. Firms must also consider data privacy and security, particularly for systems that rely on large data sets, as protecting personal and sensitive information is critical.
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Taking all this into account, housing economists and analysts agree that any market correction is likely to be modest. No one expects price drops on the scale of the declines experienced during the Great Recession.
Economists have long predicted that the housing market would eventually cool as home values become a victim of their own success. After posting a year-over-year decrease in February 2023 for the first time in more than a decade, the median sale price of a single-family home has been on the rise again, reaching the highest price NAR has ever recorded in May 2024.
Overall, home prices have risen far more quickly than incomes. That affordability squeeze is exacerbated by the fact that mortgage rates have more than doubled since August 2021.