Today’s housing market remains hot but cooling, according to figures released this week by the National Association of REALTORS®.
NAR reports total existing homes sales dipped 2.7% from February to a seasonally adjusted annual rate of 5.77 million in March. NAR economist Lawrence Yun points to rising interest rates and inflation for the decline.
At the same time, the median price for existing homes was $375,300, up 15% from March 2021, driven by tight inventories. This marks 121 consecutive months of year-over-year increases, the longest streak on record.
That could change significantly if the Federal Reserve follows through on a half-point increase in May. A rate increase next month would mark the first time since 2006 that the central bank increased its policy rate at back-to-back meetings, and a half-point increase would be the first such move since 2000.
Interestingly, Barron’s speculates that Fed efforts to cool things down could be tempered by new home construction. The backlog of houses under construction and those authorized but pending will keep home builders busy through the year, Barron’s reports, putting upward pressure on prices. The Commerce Department reported this week that most new housing starts are multifamily to meet demand in the rental market.
Caught in the middle are home buyers who must decide whether to jump into the market or wait. Zillow reports that buyers in March paid almost 20% more each month for the standard 30-year mortgage compared to those who bought in January 2022, and 38% more compared to one year ago.
In other developments, homeowner associations concerned about home values are pushing back against iBuyers who plan to rent out the homes. Tactics include placing a cap on the number of homes that can be rented in a particular neighborhood, requiring a home to be vacant for six months before renting, or requiring that rental tenants be approved by the association board. Critics say the associations could hurt people who cannot afford to buy. “There’s a pretty deep and pervasive social stigma against renters,” said Jenny Schuetz, a senior fellow at the Brookings Institution.
As brokerages look to diversify, Samson Properties, a rapidly growing Northern Virginia-based brokerage, agents receive a 100% commission split and services like training, office desks, and help with marketing. The stipulation is that agents are asked (not told) to refer clients to Cardinal Title Group, a title insurer wholly owned by Samson.
Samson claims it has a capture rate of 60%, meaning a buyer represented by a Samson agent uses Cardinal Title 60% of the time. While critics say Cardinal Title is more expensive or that Samson’s agents are less experienced, he says: “I think we have the right model for the future, no question. Disruptors and iBuyers are never going to get more than a little market share. Ultimately, the consumer is going to trust their agent.”
Finally, as we close out Fair Housing Month, we are reminded once again there is much work to do.
Mortgage lender Wells Fargo & Co. announced this week that it has committed $210 million to advance racial equity in homeownership in the United States, following a Bloomberg investigation that found the bank approved fewer than half of Black applicants for a home refinancing in 2020.
Wells Fargo’s approval rate for Black homeowners is the lowest of any major lender, according to Bloomberg’s analysis of the HMDA data. JPMorgan Chase & Co. approved 87% of Black applicants last year (93% of White applicants), Rocket Mortgage LLC approved 81% (88% of White ones), and Bank of America Corp. approved 75% (86% of White ones).
Industry challenges certainly persist; GTR recognizes that opportunities arise from challenges.