July 13, 2024

Housing Market Homebuyer Demand

Homebuyer demand in today’s housing market has plummeted!

Higher interest rates have caused both Home Prices and Stock Prices to begin declining again over the last month.

Housing Market Homebuyer Demand

Housing Market Homebuyer Demand - San Diego aerial photography
San Diego California

The U.S. housing market is setting up for a long needed correction. No other time in history have home prices been so out of reach!

The 30-year fixed mortgage rate just surged up to 7.4%. The 10-year treasury is 4.3%. These levels are too high for this economy to function. The result is that homebuyer demand in the Housing Market has plummeted. With mortgage applications to buy a house now at their lowest level since 1995. This means that sellers on the US Housing Market will be forced to cut the price for the rest of 2023. And these price cuts could be even bigger than the ones last year – especially in real estate markets like California, Florida, and Texas.

The bottom line is that with current prices and interest rates, hardly anyone can afford the monthly payment. People in the top 15% of earners can’t afford to buy “starter homes” in their own metros right now. The prices or interest rates have to go down. Buying these homes makes very little sense for institutional investors because they can’t even cashflow most of them.

We are just starting to see the effects of the higher interest rates. The price of homes will come down. Give it time. Those that have to move will sell and will have to accept a lower price and get a higher interest rate. The artificial 2% to 4% interest rates had to go; 7% to 8% for a 30 year fixed is historically typical. Not everybody should be a home owner. Some people should be renters. Want a home? . . . Save money for a down payment, and have some skin in the game . . . don’t expect to get a 100% loan!


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Housing Market Homebuyer Demand