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NEW YORK – High home prices and mortgage rates have frustrated potential home buyers, discouraging them from buying property. Orphe Divounguy, a senior economist at Zillow, says that first-time buyers “are essentially renters” who saw housing costs rise 33% during the pandemic and wages stay the same.
Many renters are currently spending up to 30% of their income on rent, making them house burdened. Others are spending up to 50% of their income or more on rent, which doesn’t leave much room for saving for a down payment or anything else, she adds.
Homeowners, on the other hand, have experienced a rise in home values, which caused “near record home equity.” Divounguy said, “And so you have kind of a ‘haves and have not’ situation, where potential sellers are in a very comfortable position, whereas potential buyers are not. I think agents have to begin to stress the magnitude of the affordability challenges that are out there.”
Agents can help potential buyers save for downpayments through assistance programs and need to work with sellers to help them reset their expectations on how much the market will bear in terms of home value and sales price.
Fannie Mae and Mortgage Bankers Association economists expect the national home price appreciation trend to cool by nearly 50% in 2025 to 3% in the final quarter of the year, which should bring down home prices.
Source: Inman (07/31/24) Carter, Matt
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