Real Estate

US home sales are increasing. When the music stops?

As soon as a housing lapse occurs, beware of the trending Google search.

In the first week of April, the US search interested in the phrase “when the housing market is crashing” jumped 2,450 percent over the previous month, and is now more popular Any time since 2004 according to Google. The search terms “I should buy a house” and “sell my house” also reached record interest.

Market watchers are right to be careful. The average selling price of a current home in the US was $ 313,000 in February, up about 16 percent from a year earlier, when a 3 to 5 percent annual increase was considered healthy, according to a report by the National Association of Realtors, a trade group.

Jonathan J. Miller said a New York businessman has analyzed markets across the country. “How long is it going to last?”

The answer will depend to a large extent on where you live and how the epidemic continues to re-orient buyer preferences, but it will hinge on two. Trend: Rising mortgage rates and incredibly tight inventory in some markets, which will likely keep demand strong through the rest of 2021, even as price increases moderate, many analysts said.

What awaits at the end of this frantic period is likely not akin to the housing bubble of 2008, which had a crash when it finally burst, he said. Today’s supercharged market is caused by epidemic forces that have challenged other assumptions about the market. Even the pendulum has rolled due to increased demand in the suburb markets.

Nationwide, housing inventory at the end of February was a record-low 1.03 million units, down 29.5 percent from a year earlier, according to the National Association of Realtors.

As a result, homes sold at an average of 20 days, a record pace when 60 days are typical, said Lawrence Yun, the group’s chief economist.

“It gives the feeling of a bubble,” Mr. Yoon said, recalling the subprime mortgage crisis that had plunged prices since 2008. “But the fundamental factors are different.”

Unlike the previous major housing crisis, in which selling prices had fallen and many buyers were stuck with risky, adjustable-rate financing, today the average 30-year fixed-rate mortgage remains near record lows, with lenders desperately underwriting. Rely on requirements, and homeowners are more liquidity.

Mr. Miller said, “We do not have pre-existing lending, and so even when the market situation worsens, some may feel they are overpaying for their assets, but on eBay and Flow There will be a regular economic cycle.

In the fourth quarter of 2021, Mr. Yoon predicted US home sales volume to be 10 percent lower than a year earlier, as mortgage rates climbed to close to 3.5 percent, up from about 2.7 percent in early 2021.

They also expected house prices to continue to rise in the short term, as they have been fond of restrictive zoning and high labor costs, for more than a decade of sluggish residential construction.

Nevertheless, the epidemic has affected markets in various ways. In New York City, where commercial real estate was battered and home buyers set out on fire in the surrounding suburbs in search of affordability and more space, the sales market closed at the beginning of the epidemic, but the corner changed.

Nancy Woo, an economist at StreetEasy, a listing website, said, “The rate at which homes are being sold nationally is not sustainable, but in New York is just starting to pick up.”

In the week ending April 11, the city had 783 newly signed contracts, since the company began tracking weekly pending sales In 2019, when Shikhar 491 was on contract, he said.

Unlike most parts of the country, New York had a glimmer of luxury inventories prior to the epidemic, and prices had softened around 2017. From 2018 to the end of 2019, Manhattan saw a 15 percent drop in sales prices, Mr. Miller said. . He said prices had dropped another 5 to 7 percent since the arrival of Kovid, which was $ 1.075 million in the previous quarter, and ultimately sellers should be more realistic. (One-bedroom apartments, the largest portion of apartments sold, closed at an average of $ 760,000.)

Price cuts have been a boon for a wider range of people. Mr. Miller said first-time buyers sold 41.9 percent of sales in Manhattan, the highest stake in the past seven years. And the share of all cash buyers fell to 39.3 percent, a seven-year low, which could reflect both favorable interest rates and a shift away from investment buyers.

Even the city’s luxury stock, which has made some of the biggest price cuts, is on a grand scale, said Donna Olshan, president of Olshan Realty, which monitors $ 4 million and more in the market. As of April 18, the city has entered 11 straight weeks with 30 or more contracts in that tier, the longest such streak since at least 2006.

“It has the potential to last a while, because the results are based on only one half tank of gas,” said Ms. Olsen, referring to the fact that most of these signatures were from domestic and local buyers, international. As buyers mostly stay with travel restrictions.

The city already has a change in mood, as vaccination advances and buyers anticipate the benefits of the federal stimulus package, with Mark Chin, an agent and Keller Williams co-head of training in New York City.

“Those who signed the contract even two months ago were absolutely thrilled, because the bottom is already over,” he said.

The revival of New York also challenges one of the early beliefs during the epidemic – that the suburbs would benefit at the expense of larger cities, where shoppers, unattractive from office traffic, could choose to stay away from work.

Instead, a new analysis of postal service change-address requests shows that migratory patterns have not been as high as some have predicted since Kovid-19. New York saw an increase in outbound migration, but it was a trend that began before the epidemic.

“The simple answer was: the city is down, the suburbs are up,” Mr. Miller said. “And now it turns out that both are up.”

So far, due to limited supply, many suburbs remain in high demand. For example, Fairfield County, Conn., Recorded 3,045 sales in the previous quarter, the highest in that period in more than 16 years, with the lowest inventory in 25 years, according to a report by brokerage Douglas Elliman .

But with prices jumping near 20 percent in some outstanding markets, Mr. Miller does not expect the benefit of continuing apps for long, in part because the appeal of many suburbs is relative affordability to large cities. The extent to which the remote state of life after the virus will remain a feature is still unclear.

“Manhattan finally joined the party,” he said, reversing the city’s sales. “But we’re not sure if this is the party we want to be in – because there is uncertainty about how it plays out.”

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