Homebuying activity is falling off a cliff (On a yearly basis, pending transactions were down by 18.7%)
Homebuying activity is falling off a cliff (On a yearly basis, pending transactions were down by 18.7%)
Pending home sales for August plunged 7.1% from the month before, according to the National Association of Realtors.
They keep blaming it on rising interest rates...
But the truth is the decline in buying is because there's nothing to buy. A person eventually sells their house for any number of reasons. A corporation using rental as long term investments never will, and the biggest don't care about interest rates because they're making cash purchases anyways.
I'm not saying high mortgage rates aren't a problem, I'm saying they only are for people buying housing to live in, and those people can't afford to buy regardless of interest
Interest rates are a big part of it because people who have a mortgage who would consider moving otherwise won't. I'd consider moving, but there's no way I'd trade my sub 3% fixed for nearly 8%.
My house is about 600k. At today's rates I'd pay nearly 1.4 million over the life of the loan. 4k per month. At my current rate I'm paying about half that. For the same house.
This is the reason no one is selling. Everyone who had a mortgage when the rates hit record lows is never going to sell. Why would they. I'd literally be better of keeping this house and renting it out if I wanted to move. Nobody with 2.9% loans is better off walking away from it, it's free money. Inflation is shrinking the value of what I owe, this mortgage is better than cash, and I get a house.
I'd literally be better of keeping this house and renting it out if I wanted to move
Define "better off". You are certainly going to have an easier time affording payments on your next house if you sell this one and use the proceeds as down payment.
Not to be rude, but are you saying you have no equity and you want to sell your house?
Because when you sell your house, what's not paid off goes to the bank, and you keep everything you paid off which in this case would go to the new house offsetting your future mortgage.
People flipping houses and moving before building equity was only a thing for a brief window
It's a few things, at least in my experience house hunting.
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High prices
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High interest rates
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Limited availability due to people being locked into low-rate mortgages
Those three items, in combination, are a death sentence for anyone wanting to enter the market. Hell, my 800 sq ft condo is going for over 650k now, which is a great litmus test for how absurd prices are right now in my area.
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Big rental corps will absolutely sell buildings when they think rents are too low. They'll sell them in bulk to some other big rental corp, though, not piecemeal, one-by-one, to owner residents. Too much overhead and time in a couple hundred individual transactions when you can just do one deal.
Can only speak for me, and the people I talk to, but the rates are less the issue. It certainly factors in, but the high total costs with no adjustments to wages means we've fallen into a gray zone where we really don't want to rent, but are forced to. I work in a hospital, and the people over ~40 are in houses that they are deathly afraid to get out of, and those of us under ~40 are renting, hoping something changes, or an asteroid strikes. Either one would be good, now.