Four signs that buying a house in this market will lead to buyer’s remorse

WRITTEN FOR NERDWALLET .COM 

It’s a tough time to be a homebuying hopeful. Sellers rule this market, and potential buyers are battling with one another over a high-price handful of homes. Buying a home is a weighty, long-term decision, and buying right now could lead to long-term regrets.

FROM YAHOO FINANCE NEWS: It’s no secret that the COVID-19 pandemic has turned the real estate market into a wild domain. If you’re looking to buy or sell a home, you’re likely eager to know how long this will last.

In June 2021, home prices across the U.S. surged 24.8% year-over-year — to a median sale price of $386,888 — according to Redfin. During the same time period, the number of homes sold increased 20.6% and the number of homes for sale tumbled 39.6%.

Mortgage rates have reached record lows during the pandemic and have once again been on the decline since late June. Specifically, the 30-year fixed-rate mortgage was 3.02% on June 24, dropping to 2.78% on July 22.

While an economic upturn was predicted, the Delta variant could send that to a screeching halt. On July 27, the Centers for Disease Control and Prevention reinstated their recommendation that fully vaccinated people in areas of substantial or high transmission wear a mask indoors.

Only time will tell if additional COVID-19 restrictions will return, and how this could impact the housing market. However, several real estate agents and experts have weighed in with their opinion of what the market will look like for the rest of the year.

“The real estate market in the first half of 2021 bore the surging demand from a millennial reshuffling,” said Greg Toschi, CEO of Poplar Homes, a California-based real estate technology and services company. “Millions of older millennials are creating families and were planning to buy a home in 2022 to 2025.”

However, he said a lot people decided to make the move earlier, instead of following their original homebuying timeline.

“We saw this in the rental market with a 100% increase in the number of people moving to buy a home or change jobs,” he said. “All that demand was pulled forward and unleashed like a sling shot — alas, prices skyrocketed.”

Toschi said this also happened during what is typically the hottest season for homebuying, which contributed to the surge. Heading into the fall months, activity usually slows and prices tend to drop. Right now, he said many homebuyers are opting to wait to make a purchase because prices are too high.

“Inventory numbers are also climbing,” he said. “But prices probably won’t go down much as normal.”

While the enthusiasm of those who have been shopping for a new home for awhile might fade, he noted there are still tons of new buyers entering the market.

“If the COVID Delta variant leads to further lockdowns and quarantines, the real estate market will probably behave in a similar way as the last lockdown,” he said. “Though I’m not sure it will deter buyers who built up a lot of motivation during quarantine.”

Jason Gelios, a realtor in Southeast Michigan, said he’s starting to notice a bit of a difference in the market.

“There is a slight change happening in the current housing market where buyer demand has actually decreased,” he said. “In my market of Southeast Michigan, we are still seeing more buyers than homes available, however we aren’t seeing lines of people waiting to view a home.”

Despite the shift, Gelios predicted the real estate surge isn’t stopping anytime soon.

“We will see a slight increase in mortgage rates, probably 3.5% by mid-fall, and a slight increase in housing inventory as we approach the later part of 2021,” he said. “We don’t anticipate a full switch in the housing market until sometime in 2022 where it would be considered favoring buyers.”

Betsy Ronel, a licensed real estate salesperson with Compass in Westchester County, New York, said she thinks the market in her local area will soften slightly until the winter months, because buyers are discouraged.

“Then, depending on this Delta variant and mask laws, the market might quiet down until the spring,” she said. “I think either way we will have a stronger spring market, but we won’t be back to a more balanced market for some time.”

Ronel said she believes the market will be in recovery mode for the foreseeable future.

“It’s a national issue, so things are stalled everywhere in some way,” she said.

Of course, not every U.S. city has experienced a chaotic real estate market during the pandemic.

“While many suburban markets have enjoyed significant price appreciation due to COVID, some of the best cities in the country have been discounted — New York being one of them,” said Daren Herzberg, a licensed associate real estate broker and co-founder of The Babst + Herzberg Team at Compass in New York. “Now is the time to buy.”

He said a significant amount of people are returning to New York City and taking advantage of the double discounts rarely enjoyed on real estate, which is bringing the Big Apple back to life at record pace.

 “On top of that, outdoor dining, bike lanes and a brand new and better selection of retail will make the best city in America feel like the Roaring ’20s,” he said. “And on top of that, historically low interest rates and a vibrant economy should make a move into real estate compelling in any market — in spite of recent price increases.”

While the real estate market has largely been hot across the U.S., local market conditions vary and will continue to do so. If you’re planning to buy or sell a property this year, check with a licensed real estate agent in your area to learn more about regional trends.

WRITTEN BY LAURA WOODS FOR YAHOO FINANCE

FROM CNBC REAL ESTATE NEWS:

The epic housing shortage that began before the pandemic and then was exacerbated by it may finally be starting to ease up.

More supply is suddenly coming on the market, which will certainly help frustrated buyers and could, in the longer term, take some of the heat out of home prices.

In June, new listings increased 5.5% year over year and 10.9% compared with May, according to Realtor.com. Among the nation’s larger cities, the 10 markets with the highest new listings increases posted gains of 20% or more from a year ago.

“Although there’s still a significant shortage of homes for sale and home prices just hit a new high, our June data report shows good news on the horizon for buyers,” said Realtor.com senior economist George Ratiu. “Inventory declines improved over the steep drops seen earlier in the pandemic as sellers stepped back into the market in a variety of price ranges across the country.”

The jump in inventory is surprising, because new listings historically fall between May and June, following the busy spring market. Today’s housing market, however, isn’t following the usual rules, since the pandemic created unprecedented sudden demand for larger suburban homes.

“The improvement we saw in new listings growth from May to June shows sellers are entering the market historically later in the season, which could mean we’ll see home buying continue into the fall as buyers jump at new opportunities,” added Ratiu.

The unexpected new supply is certainly welcome news for homebuyers, many of whom have been sidelined in bidding wars, but the market is still extremely lean. The inventory of homes for sale was down 43.1% year over year at the end of May, representing 415,000 fewer homes for sale on a typical day in June. That is, however, an improvement from the more than 50% declines seen in March, April and May. New listings, again, were higher, but still well below the pre-pandemic average for June.

Still, the new supply is giving some frustrated buyers more to choose from. In Washington, D.C., where the market is extraordinarily tight, it has been common to see most listings sell within a week or two for well over asking price. New listings were up 36% in June from a year ago, but total supply is still down 9%.

“What I’m seeing is the market is easing ever so slightly,” said Jennifer Myers, founder and owner of Dwell Real Estate Brokerage. “That means that more people are going under contract for their next home, which in turn means more listings are coming up because those people are now able to sell their current home. Little hinges swing big doors, as they say.”  

In the Dallas-Fort Worth market, which has seen major demand recently from California transplants, new listings actually fell 5% in June and total supply is down 59% from a year ago. Still, the month’s supply, which is a calculation involving how much is selling compared with how much is for sale, did rise slightly.

“Yes, but not by too much,” said Laura Barnett with Re/Max DFW Association. “But it typically goes down after July. The demand goes down a bit as well for suburban areas that focus on the school year. But since this is a strange year, I am not sure what will happen.”

Cities seeing the largest increase in new listings are mostly in the Midwest. Milwaukee, with a 45% increase; Cleveland, with 38%; and Columbus, Ohio, with 26%, top the list. As an outlier, San Jose, California, one of the priciest markets in the nation, saw new listings spike 41%. Phoenix, which had very strong pandemic-induced demand from Northeast transplants, saw new listings up 28%.

On the flip side, Miami, which was probably the most popular destination for New York transplants in the last year, saw new listings decline 8%. Other Southern cities, such as Raleigh, North Carolina, and Nashville, Tennessee, also saw sizeable declines.

If more homes continue to come on the market, along with a steady increase in new construction, the housing boom will slowly pull back. It is unlikely, however, to decline sharply, or “bust,” simply due to favorable demographics and still historically low mortgage rates.

“If these trends persist, inventory declines and price growth may continue to moderate as the housing market returns to a more normal pace of activity heading into the second half of 2021,” Ratiu said.  

WRITTEN BY DIANA OLICK FOR CNBC.COM / REAL ESTATE

FROM CNBC REAL ESTATE: The pandemic-induced housing boom may not be over quite yet. Despite recent months of softening sales, buyers came back remarkably strongly in May.

Pending home sales, a measure of signed contracts on existing homes, jumped an unexpectedly high 8% in May compared with April, according to the National Association of Realtors. Analysts expected a 1% drop. This is the highest level of sales activity for May since 2005.

Sales were up 13% from May 2020, when the housing market was just beginning to come back from the coronavirus lockdown. Pending contracts are a forward-looking indicator of closed home sales.

“May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” said Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.”

After falling quite sharply in April, the average on the 30-year fixed hovered in a tight range throughout May, giving some buyers at least a little relief on potential monthly payments.

But sky-high home prices have been a major concern. In April, the much-watched S&P Case-Shiller National Home Price Index was up more than 14% year over year, the largest gain in its 30-year history.

The Realtors report even higher gains in the median home price, some of which is skewed due to the fact that more of the sales activity is happening on the higher end of the market, where listings are more plentiful. The low end of the market is barely budging, as first-time buyers struggle for meager listings. Investors, the majority of whom use cash, are also more prevalent at the lower end of the market.

Weekly mortgage demand is falling, down nearly 7% on the week, according to the Mortgage Bankers Association — a sign that the housing boom might be starting to fizzle.

“While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” Yun said.

Regionally, pending home sales jumped 15.5% in the Northeast month to month. In the Midwest, sales rose 6.7%. Sales in the South climbed 4.9% from April. In the West, they rose 10.9%.

Tight supply of existing homes has been a major factor, but that supply did rise slightly in May compared with April, although it was still historically low. Supply of existing homes is about 20% below year-ago levels. Homebuilders have also not been ramping up production as quickly as the market is demanding.

Sales of newly built homes in May, which are also measured by signed contracts, fell nearly 6% from April, as builders continued to raise prices. The median price of a newly built home sold in May was up 18%, according to the U.S. Census. Builders have seen soaring costs for land, labor and materials. While the price of lumber has come down dramatically in the last month, it is still well above pre-pandemic levels.

WRITTEN BY DIANA OLICK FOR CNBC REAL ESTATE

FROM LARCHMONT CHRONICLE:
Local stakeholders last month continued their dialogue over the future of Larchmont Boulevard.

As reported in April, questions have been raised over recent weeks as to whether parking spaces might be permanently replaced with outdoor restaurant dining now that pandemic-related restrictions are ending.

That also propelled discussion about perennial Larchmont topics like the existing limitations on certain types of businesses such as restaurants. Further, with Larchmont Boulevard celebrating its centennial year in 2021, it seems to many residents to be a good time to reevaluate how local neighborhoods interact with, and envision the future of, the historic shopping district.  

The Larchmont Boulevard Association (LBA) is spearheading the effort. It seeks an organized discussion through the committee it convened, headed by LBA board member Patty Lombard.

Of the group, Lombard tells the Chronicle that: “So far, we have a very small working group putting together a structure for an open, transparent community conversation on the current issues facing the street with professional assistance from Windsor Village resident and architect and urban planner John Kaliski, FAIA. Other members of the group are Heather Duffy Boylston with the Larchmont Village Business Improvement District and Gary Gilbert, representing the Windsor Square Association.

“Our working name is ‘Larchmont 2021’ and our focus is to facilitate the retail stability of the street and enhance Larchmont’s character.”

The working group’s approach is still evolving: “But we’d like to conduct a series of learning and listening sessions with experts on local retail streets and placemaking,” she explains.

“Once we fill in the details of the sessions, we will engage a larger working group of stakeholders representing the various other groups in the neighborhood, including the Hancock Park Homeowners Association, the Larchmont Village Neighborhood Association and others who have volunteered to help, to get their ideas as well. Once we have consensus on conducting the conversation, we hope to get the first session underway in June, either virtually, or in-person, or a hybrid, depending on the pandemic restrictions,” said Lombard.

Mayor Garcetti

“In a city whose unofficial motto is 72 and sunny, let’s make al fresco dining permanent,” said Mayor Eric Garcetti on April 20, proposing during his 2021 State of the City address an allocation of nearly $2 million in grants for restaurants in low-income neighborhoods to set up permanent parklets for outdoor dining. Will that include Larchmont?

Resident voices

The debate about the future of Larchmont also continued on the social media site Nextdoor as residents shared their thoughts about the Larchmont Chronicle’s April article: “I like the outdoor dining idea, it’s so much better than the way it used to be with tables scattered all over the place, sometimes making the Blvd. an obstacle course to walk down. Be great to make Larchmont more user friendly,” said Keith Johnson. “I miss the hardware store! It was so sweet. Small, but somehow he had everything I needed. Unfortunately the rents have skyrocketed, and I am concerned we’ll lose the small business owners/shops,” said Lisa Brause.

“I love having the outdoor dining. I think it will ultimately bring the Larchmont community together, especially for those of us who are lucky enough to live in the neighborhood. The businesses I most wish were on Larchmont: a small hardware store and a small food market,” wrote C. Pierson on the Chronicle website. 

Building unveiled

Speaking of improvements on Larchmont Boulevard, last month the longtime boarded-up Mirzrahi family-owned building at 227 N. Larchmont Blvd. was unveiled, freshly remodeled, with a glass and steel façade, and new for-lease signs posted. The late Albert Mizrahi purchased the building, which previously was the site of Prudential Real Estate, in 2007. The following year, Mizrahi told the “Los Angeles Business Journal” that he had rented the space to Wachovia Corp. for a bank branch to open in the fall of 2008. However, due to the sub-prime mortgage crisis that year, Wachovia was acquired by Wells Fargo, putting Mizrahi’s lease in dispute. The building was left vacant and boarded-up until now, more than a decade later.

WRITTEN BY BILLY TAYLOR FOR THE LARCHMONT CHRONICLE