IF Karma is getting what you deserve and deserving what you get, then you’d have to think the owners of this Upper Rochestown property deserved a good home, because that’s what they got.
It’s been “the perfect house to raise a family” they say, in Rathanker, an area primed to enjoy that holy trinity of countryside, coast and city: far enough out of town to feel rural, it’s still just 10 minutes by car to Douglas, and a three minute drive to the harbour.
The vendors, originally from Limerick, had been looking to buy in the area, and as Karma would have it, they came across this detached bungalow, dating to the late 1970s, which they bought for €277,000 in 2011, looking a lot more tired than it is now.
They moved in on “a cold, icy week before Christmas”, when the woman of the house was heavily pregnant. She gave birth to their first child on New Year’s Day.
Over the next couple of years, they invested heavily in improving their home and 0.4 acre elevated garden, starting with the outdoors in 2012.
“It was completely sloped from the back of the garden right up to the back door. We did extensive groundwork to have two level, tiered gardens with supporting wall and connecting steps to the patio,” they say.
They did a terrific job, before turning their attention indoors, moving a small, dark kitchen from the back of the house to the sunlit front, and opening it up to make kitchen/dining/living area all one.
Major insulation work was undertaken too: the entire house was dry lined, the attic insulated, new doors and windows fitted, a new stove with back boiler installed and a new boiler.
New flooring was laid throughout, inside and outside was painted and a converted attic space was modernised. “It changed the whole dynamic of the house and completely opened it up,” the owners say of their work.
In 2017, the focus switched back outdoors when an opportunity arose to purchase a neighbouring strip of land from a local farmer. They cleared and re-seeded it “Our son was particularly delighted as it allowed space for his goalposts and miniature soccer field for him and his pals,” the owners say.
Having put so much into, they are sorry to sell up, but overseas work has dictated a change.
Stephen Clarke of REA O’Donoghue & Clarke is the selling agent and his guide for the 114 sq m four-bed is €495,000. It comes with the added benefit of full planning permission for a side and dormer-style extension/conversion for those who would like more space.
“We have put much love and time into this house and would hope someone else can enjoy it now and make as good memories as we have, call it “good karma” I suppose,” they say. They point out that the location is ideal for family, or for a couple downsizing: close to golf, tennis and sailing clubs. There are playgrounds too in nearby Monkstown and Passage West, and Greenway walks on nearby quays.
: Relaxed setting for a fresh, contemporary home, with great outdoor space in an accessible location. Positive Karma.
By Joe Hoppe
Shares in Trafalgar Property Group PLC rose Monday after the company said that it has entered a conditional agreement to buy assets and leasehold premises for a hydroponic research and development facility for 30,000 pounds ($35,664) from May Barn Horticultural Consultancy Ltd.
Shares at 0802 GMT were up 0.03 pence, or 17%, at 0.21 pence.
The residential and assisted-living property developer said that the cash acquisition is a further step in its plans to facilitate its vertical hydroponics strategy with opportunities for research relevant to food, cosmetic and pharmaceutical products.
The acquisition is conditional upon shareholder approval as May Barn is controlled by Trafalgar’s Executive Director Paul Challinor. The company will seek approval at a general meeting set for Dec. 8.
The consideration is considered to be significantly less than it would cost to purchase and set up new equipment and fit out new premises, Trafalgar said.
The company’s residential property activities have continued to progress during 2022, including receiving outline planning permission a private residential plan with an option to purchase land, it added.
Write to Joe Hoppe at joseph.hoppe@wsj.com
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The housing market has pulled back from its pandemic frenzy as mortgage rates have risen.
Chet Strange/Bloomberg
Two closely watched gauges of new-home construction fell in October—the latest sign of the continued housing market pullback.
Housing starts—an indicator of the beginning of construction on a new home—in October were at a seasonally-adjusted annual rate of about 1.43 million, down 4.2% from a revised 1.49 million in September. Permits, an indicator of future construction, fell 2.4% to about 1.53 million from about 1.56 million in September.
The reading was better than consensus estimates gathered by
FactSet
had anticipated. Housing starts were expected at a seasonally-adjusted annual rate of about 1.42 million, while permits were expected at a rate of about 1.51 million, according to FactSet.
The slowdown in construction adds to the picture of a housing market pulling back from its pandemic frenzy as mortgage rates remain near 7%, more than double their rate at the beginning of the year. Single-family construction led the pullback, with both one-unit starts and permits at their lowest levels since May 2020. Year-to-date, single-family starts are down 7.1% on an unadjusted basis.
The decline in construction comes as home builders remain sour on the housing market. The National Association of Home Builders’ index tracking builder sentiment declined in November for the 11th month in a row, the trade group said Wednesday. With the exception of April 2020, the index was at its lowest level since 2012.
“Higher interest rates have significantly weakened demand for new homes as buyer traffic is becoming increasingly scarce,” Jerry Konter, the trade group’s chairman, said in a statement. An index subcomponent measuring traffic of prospective home buyers fell for the eighth month in a row, the data showed.
Mortgage rates have been gaining throughout 2022, climbing above 7% for the first time since 2022 earlier this year. Home sales, in response, have fallen. Sales of existing homes fell to a preliminary seasonally-adjusted annual rate of 4.71 million in September, the lowest monthly rate since the early months of the pandemic.
Home sales in October likely continued to slump, according to FactSet consensus estimates for the coming National Association of Realtors report. Consensus expects existing homes in October to have been sold at a seasonally-adjusted annual rate of 4.37 million. Such a rate would represent a 30% fall from the same month last year, and a 7.3% month-over-month decline. October’s data is expected at 10 a.m. on Friday.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
Home prices will fall in 2023, but affordability will be at its worst since 1985, research firm says
Home prices will fall by 8% next year, but high mortgage rates and a possible recession will continue to hurt affordability, a new report says.
In a report published this month, independent research firm Capital Economics warned that sales will slump and housing prices will fall over the coming year.
With lending standards still tight and affordability poised to worsen, consumers should expect their purchasing power to deteriorate even as housing prices fall, the group said.
“Given that we are unlikely to see an improvement in affordability anytime soon, many buyers will be priced out of the market, while others will simply be unwilling to make a purchase,” the report stated. “As bidders become scarcer, market power will shift further from sellers to buyers.”
Sellers, many of whom now have mortgages with ultralow rates, will be forced to accept lower prices over the next year, the research firm said. After mid-2023, when Capital Economics forecasts home prices to fall by 8% compared with this year, consumers can expect price growth to recover to 2.5% by the end of 2024.
“ “As bidders become scarcer, market power will shift further from sellers to buyers.” ”
The group also expects mortgage rates to “hold close to 7% over the remainder of next year,” which means affordability will be at its worst since 1985.
For a median-income household buying a median-priced home, the mortgage payment as a share of income rose to 28.5% in October 2022 from 13.3% in May 2020, the group said.
The median listing price for a home in the U.S. is currently $425,000, up 13% over the last 12 months, according to Realtor.com. (Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.
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Mortgage rates will go back down to 5.75% by the end of 2023, the Capital Economics researchers forecast in the report.
The group also expects that the U.S. economy will fall into a “mild recession” in 2023 and that sales of single-family homes will fall to the lowest level since 2011. It also expects single-family-home starts, or new construction, to fall to the lowest level since 2014. The market will recover in 2024, the report said.
Even though prices are expected to fall, people may still find it hard to afford to buy a home, meaning that more prospective buyers will likely move into the rental market, the report noted.
Some good news: Buyers can expect a surge in new supply next year as builders complete construction on homes, which will prompt rents to fall 0.5% in 2023, the report said.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
Realtors are turning bearish on commercial real estate.
Well, technically — the National Realtors Association (NAR) said it’s expecting the commercial real-estate market to experience a “slight decline in prices” in 2023.
“Nationwide, we are beginning to see some decline in commercial appraisal values,” Lawrence Yun, chief economist at NAR, said over the weekend.
“Cap rates simply cannot match up with higher borrowing costs, especially among people who need to refinance their properties,” he added. “However, strong job growth is supporting prices in many markets.”
Cap rate refers to the capitalization rate, which is used to calculate the expected rate of return for a property, be it residential or commercial. The cap rate is calculated by dividing a property’s net income by its asset value.
With interest rates rising sharply over the last few months, that’s increased borrowing costs, and in turn forced cap rates up, Yun explained, and pushed property values downwards as a result.
“Offices are the most vulnerable to these price decreases,” Yun said.
“We are seeing a rise in office vacancies in many cities, driven by a preference for remote work,” he added. Before the pandemic, San Francisco saw an office vacancy rate of just 6%, he noted. Now, it’s more than 15%.
According to Green Street’s commercial property-price index, rising rates have pushed property prices down by 13% from a peak this year.
“It’s a simple story: higher yields on Treasury bonds equals higher cap rates,” Peter Rothemund, co-head of strategic research at Green Street, said in a statement.
Offices saw a drop in prices of 17.5%, the company said in its report.
“And as large as the decline in pricing has been, I don’t think we’re out of the woods,” he added. “If the 10-year note stays above 4%, property prices are likely to keep falling.”
And while some bosses like Elon Musk are trying to get people back into the office, it’s unlikely that employees will return fully to the office like the days before the pandemic, the NAR said.
Employees will spend 25% to 35% less time in the office than they did before the pandemic, Matt Vance, senior director and Americas head of multifamily research and senior economist for CBRE, said.
That translates to about a day, to a day and a half less in the office, he estimated. And “we believe this will translate to a 15% reduction in office space demand per employee,” Vance said.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
Dubai, United Arab Emirates – In the face of rising inflation rates, supply chain disruptions and the growing net zero agenda, AESG has launched its new portfolio of Cost Management Consultancy Services. This line of services optimises cost efficiency and minimises risk for construction projects ranging from new developments and asset refurbishments to financial feasibility studies. Decarbonisation efforts under the lens of cost management expertise ensures an increased value proposition, setting out a path for financially optimised success in the net zero economy.
Research shows that a staggering number of construction projects experience budget overruns. “We’re witnessing an unprecedented shift in the regional construction industry with the announcement of several iconic developments and giga-projects. Ensuring these ambitious undertakings can be executed within budget will ensure their timely progress and completion and pave the way for further success. Moreover, cost management can play a key role in enabling organisations to achieve their net-zero ambitions, which in turn grants them easier access to working capital,” explained Saeed Al Abbar, CEO at AESG.
The new Cost Management offering further extends AESG’s multidisciplinary expertise in sustainable design, fire engineering, façade engineering, acoustics, environmental consultancy, building commissioning and digital asset management and strategy and advisory. “With vast experience, gained from working on hundreds of iconic developments, our multi-disciplinary team has unparalleled insight into the multitude of factors that directly and indirectly impact overall project costs and timelines. This enables them to expertly guide clients in realising the maximum value for their money from the outset.”
To effectively deliver these offerings, the company has established a highly qualified Cost Management team, and appointed Gary Tracey, and industry veteran of 18 years, as Global Partner and Head of Cost Management. With a Degree in Construction Economics and Management, Estidama Pearl Qualified Professional (PQP) and MRICS qualifications, Gary adds value to the development equation through his unique blend of construction knowledge and local market understanding.
“While cost overruns can be common in the construction industry, the reality is that many of the underlying factors scale exponentially, so effectively identifying and mitigating these, yields significant positive impact,” said Tracey. “In my 15 years in the region, I have gained a deep understanding of these challenges across a wide range of project types. I am enthused by the prospect of leading this highly qualified team in delivering this service to the Middle East market at this critical juncture when developers are undertaking highly sustainable, mega and giga-projects that will secure a top position for the region on the global stage.”
By James Glynn
SYDNEY–Sales of new homes plunged across Australia in October, as a record pace of interest-rate increases since May and surging construction costs chased buyers away.
Sales of new homes fell by 22.8% in October compared with September, with all regions hit hard, the Housing Industry Association said Thursday.
Sales of new homes had already fallen 15.8% in the three months to the end of September, due to increases in the cash rate starting in May 2022, according to the association, which represents home builders.
The Reserve Bank of Australia has added 275 basis points to the official cash rate since May, with further hikes expected in December and early next year.
“The increase in interest rates is compounding the rise in the cost of new-home construction and further reducing the capacity of borrowers to finance the build of a new home,” said Tim Reardon, chief economist at the association.
Despite the fall in sales over the past four months, a significant volume of home building is under way, and many homes are still to commence construction, he added.
This will ensure that work on the ground remains strong through 2023, Mr. Reardon said.
“The consequence of the fastest increase in the cash rate in almost 30 years will see detached-home building activity slow to its lowest level in a decade by 2024, he said.
For the three months to October, compared to the previous three months, new home sales in Queensland were down by 31.9%; the number for Victoria was down by 22.8%; New South Wales was down by 19.6%; and Western Australia new home sales were down by 9.1%, the Housing Industry Association report showed. South Australia saw the only increase, rising by 13.9%.
Write to James Glynn at james.glynn@wsj.com
Issuance of a newer breed of real estate bonds designed to finance riskier commercial properties for short stretches has tumbled 80% from a $16.5 billion first-quarter peak, according to DRBS Morningstar.
The bonds, called CRE CLOs, are considered a far tamer version of the subprime home-loan CDOs, or collateralized debt obligations, that flourished in the run-up to the 2007-08 global financial crisis and later caused global fallout from U.S. homeowner defaults. CRE CLO stands for commercial real-estate collateralized-loan obligation.
But instead of financing home flippers with questionable credit, the newer brand of debt mostly hinges on payments from landlords on pools of floating-rate loans for multifamily properties, a “favored asset class” that accounts for about 77% of the outstanding CRE CLO collateral, according to the report.
Loans on industrial buildings make up only about 7% of the collateral, followed by a smaller share of hotel loans at 6.4%, offices at 3.4% and retail properties at 2.1%, all of which have been vulnerable to shifts in the way people travel, work and shop.
While delinquencies have yet to become a key concern, the report says “unfettered inflation,” global market volatility and the Federal Reserve’s rapid pace of rate hikes have hampered new loan originations. Those factors and “weaker investor demand” for CRE CLOs led to a sharp drop in new issuance this year (see chart).
A popular form of financing for commercial real estate is drying up as rates rise.
DBRS Morningstar
CRE CLOs have been in the spotlight recently due to their higher risk of running into trouble as rates rise. Spreads on CRE CLOs last week were pegged at their widest levels of the year, with BBB-rated bonds near 535 basis points above the floating-rate SOFR benchmark rate, according to BofA Global data.
Against the cloudier backdrop, issuance volume touched only $3.1 billion in the third quarter, according to DBRS Morningstar. As benchmark 10-year Treasury rates
TMUBMUSD10Y,
have topped 4% this fall, concerns also have grown that borrowers with older fixed-rate loans coming due could struggle to refinance, especially if property prices fall.
Risks of payment shocks rise
Goldman Sachs analysts recently said the risks of a “payment shock” for borrowers in the roughly $3.5 trillion commercial-debt market would build if interest rates remain elevated at current levels, with the risks being the highest for floating-rate loans, a big part of the CRE CLO sector.
Also read: Credit carnage spurs bargains on bonds tied to $16 trillion pile of U.S. household debt
BofA Global analysts estimate that prices for commercial real estate could drop 20% to 30% over roughly the next year, tracing the roughly 27% drop of the Dow Jones Equity REIT Total Return Index
DJDBK,
this year.
“The restrictive conditions may affect CRE CLO loan performance since borrower costs have increased quickly and underlying property cash flows may face similar difficulties,” said the DBRS Morningstar team, which is led by Steve Jellinek, head of CMBS research.
“Borrowers’ financial projections most likely didn’t assume 7%+ interest rates during the loan term,” the team said.
Home buyers are looking for ways to whittle down their mortgage rates. As a result, a once-popular home-selling tactic is making a comeback. It’s called a temporary buydown, and it was widely used when mortgage rates were zooming upward in the late 1970s and early 1980s.
The revival of the temporary buydown is timely, as mortgage rates are at a two-decade high, with the Federal Reserve expected to raise the floor under mortgage rates twice more this year. Fewer people are buying homes because rising rates make homeownership unaffordable. In some markets, negotiating power is even shifting from sellers to buyers.
In these conditions — when interest rates are rising and home sellers must make an effort to lure buyers — temporary buydowns can flourish. It’s time to dust them off and put them to use.
How do you buy down a mortgage rate?
A temporary buydown reduces the home buyer’s monthly payments in the first year, or sometimes in the first two or three years. Instead of making the mortgage’s full monthly payments from the get-go, the home buyer will make discounted payments for a year or more.
This is accomplished by subsidizing the interest rate that the borrower pays. For example, let’s say a buyer gets a mortgage at a 7% interest rate, with a one-year buydown. Because of the buydown, the monthly payments in the first year are based on a 6% interest rate before rising to 7% thereafter.
If the borrower got a $300,000 mortgage in this hypothetical example, the buyer’s principal-and-interest payments in the first year would be $1,799 a month, before rising to $1,996 a month in years two through 30. A buydown under these terms would save the borrower about $197 a month in interest in the first year, for a total of $2,367.
Traditionally, most temporary buydowns are paid for by home builders and home sellers as a closing cost equal to the buyer’s interest savings. In the example above, the buyer saves $2,367, and the seller deposits that amount into a custodial account at closing. The loan servicer draws from the account every month to make up the difference between the full loan payment and the discounted bill the homeowner is paying.
The twist these days is that some lenders are offering temporary buydowns as a means of competing for business when there are fewer mortgages to write. When comparing lenders, this is a feature worth watching for.
What the buyer gets out of it
“Buydowns were a routine affair when I got into the real estate business in 1978,” says Lou Barnes, senior loan officer with Cherry Creek Mortgage in Boulder, Colorado. Mortgage rates were rising fast in those days, as they are now, and buydowns were designed to ease the buyer’s transition from a lower interest rate or cheaper rent, Barnes says.
Nowadays, temporary buydowns appeal to first-time home buyers who are shocked by the speed at which mortgage rates have risen, and who will deplete their savings on the down payment and closing costs. The temporary payment reduction allows borrowers to replenish savings or spend the money on home upgrades.
“You know how it is when you buy a home: You might want to buy new carpeting, new appliances — what it takes to make it your home,” says Bill Banfield, executive vice president of capital markets for Rocket Mortgage.
Rocket is paying for one-year buydowns through the end of 2022, Banfield says, with a product the company calls Inflation Buster. New American Funding offers lender-paid buydowns, too, said Ben Lane, New American’s managing director of editorial, through email. And other lenders have recently begun to market buydowns paid by sellers.
Buydowns can last longer than one year, allowing borrowers to extend their savings:
- A 2-1 buydown reduces the interest rate by two percentage points in the first year, then by one percentage point in the second year, before rising to the full rate after that.
- A 3-2-1 buydown lasts three years, with the interest rate reduced by three percentage points in the first year, by two percentage points in the second year and by one percentage point in the third year.
- With a 1-1-1 buydown, the rate is reduced by one percentage point for three years.
Learn more: Here are ways to lower your mortgage rate, according to this mortgage company CEO
What the seller gets out of it
Temporary buydowns are “older than bell-bottoms,” Banfield says, and there are signs that they are coming back into fashion as negotiating mojo shifts from sellers to buyers. The reason: Buydowns are a time-tested way to entice reluctant buyers.
A seller may offer a buydown instead of dropping the price. That way, the seller gets to brag about getting the desired price while the buyer saves money.
For example, let’s say the buyer and seller are $7,000 apart after days of haggling. A temporary buydown resolves the impasse:
- The buyer pays the price the two sides are stuck at: $7,000 more than the buyer wants to pay.
- As a compromise, the seller pays for a 2-1 buydown on the buyer’s $300,000 mortgage at a 7% interest rate. The 2-1 buydown saves the buyer $6,992 over the first two years of the loan. That $6,992 comes out of the seller’s proceeds at closing — equivalent to a price cut, but invisible to the neighbors.
Negotiating a buydown
Either side can suggest a buydown. The seller can offer one proactively, as a competitive tactic. The buyer can request one as a seller’s concession.
The lender must qualify the borrower at the full interest rate, which requires the lender to determine that the borrower can afford to repay the loan after the rate reductions have run out.
Government-sponsored mortgage companies Fannie Mae
FNMA,
and Freddie Mac
FMCC,
impose limits on seller concessions, including temporary buydowns. Limits vary, depending on down payment size.
Fannie and Freddie also restrict temporary buydowns to a maximum of three years. And to soften payment shock, the effective interest rate can go up only one percentage point each year. So the borrower’s effective rate can’t jump from 5% to 7%; it would have to go from 5% to 6% for a year before settling at 7%.
How buydowns differ from ARMs
A temporary buydown resembles an adjustable-rate mortgage because the borrower starts out making payments at one interest rate and later makes payments at another interest rate. But a buydown is not an ARM.
A key difference is what happens with the interest rates. On an ARM, the interest rate and the monthly payments can change periodically for the life of the loan. With a buydown, the interest rate never changes. Instead, the seller (or sometimes the lender) pays part of the borrower’s interest payments in the first year or two or three, but the underlying note rate remains the same.
One argument in favor of ARMs is that they last longer and can result in greater savings, at least in the first five years, says Carolyn Morganbesser, assistant vice president of mortgage originations for Affinity Federal Credit Union in New Jersey.
“The ARM is going to get you into your home; it’s going to give you the lowest possible payment at this given time,” Morganbesser says.
While that may be true, one drawback to ARMs is that a seller can’t offer them as a concession. Morganbesser says that in her area, this objection is irrelevant right now because it’s still strongly a seller’s market, so sellers have little incentive to offer concessions.
But in some places away from the East Coast, sellers already are competing for a dwindling pool of willing buyers. In these markets where buyers have the power to pick and choose, sellers might be inclined to offer buydowns.
How buydowns differ from discount points
Paying discount points is a way to permanently reduce the interest rate, and therefore the monthly payments. Sellers can pay discount points as a sales incentive. But with discount points:
- The monthly savings are less. Paying one discount point — equal to 1% of the loan amount — typically reduces the interest rate by about one-quarter of a percentage point.
- Even though the monthly savings aren’t much to boast about, the cumulative savings can be substantial over several years.
- It usually takes six or seven years of regular payments for the accumulated savings to exceed the upfront cost.
“If you sell or refi before those six years, you leave money on the table,” Barnes wrote in an email.
In contrast, the buyer’s savings from a temporary buydown equal the seller’s upfront cost in one to three years.
Also read: Home buyers are looking older — and whiter
A welcome return to normality
The imminent revival of temporary buydowns is a harbinger of a more traditional housing market in which sellers and their real estate agents are no longer sorting through a dozen desperate offers for every house.
“There will be an effort to sell properties where this creative structuring and financing might come into play,” says Michael Kelczewski, real estate agent for Kurfiss Sotheby’s International Realty in Wilmington, Delaware. “Or, you know, just time-tested methods like holding an open house, a broker’s open, calling agents, sending out emails, sending out postcards — doing all the salesman stuff to get these properties sold.”
Holden Lewis writes for NerdWallet. Email: hlewis@nerdwallet.com. Twitter: @HoldenL.
House prices will fall in 2023, but affordability will be at its worst since 1985, says Capital Economics
Home prices will fall next year by 8%, as mortgage rates and a recession will continue to hurt affordability, a new report says.
The report by Capital Economics, published this month, which outlines its outlook for housing over next year, warned that sales will slump and housing prices will fall.
With lending standards still tight, and affordability poised to worsen, expect purchasing power to deteriorate, and housing prices to fall by 8% by mid-2023, the group said.
“Given that we are unlikely to see an improvement in affordability anytime soon, many buyers will be priced out of the market, while others will simply be unwilling to make a purchase,” the group stated in their report.
“As bidders become scarcer, market power will shift further from sellers to buyers,” they added.
Sellers, currently sitting on homes enjoying ultra-low mortgage rates, will be forced to accept lower prices over the next year, Capital Economics said. After home prices fall 8% in mid-2023, compared to this year, expect price growth to recover to 2.5% by the end of 2024, they added.
“After home prices fall 8% in mid-2023, compared to this year, expect price growth to recover to 2.5% by the end of 2024.”
— Capital Economics
Capital Economics also expects mortgage rates to “hold close to 7% over the remainder of next year” which means affordability will be at its worst since 1985.
For a household with a median income buying a median-priced home, the mortgage payment as a share of income rose to 28.5% in October 2022 from 13.3% in May 2020, the group said.
(The median listing price for a home in the U.S. is currently $425,000, up 13% over the last 12 months, according to Realtor.com. Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.
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Mortgage rates will go back down to 5.75% by the end of 2023, they forecasted.
The group also expects the U.S. economy to fall into a “mild recession” in 2023, and expects single-family sales to fall to the lowest level since 2011. It also expects single-family starts, or construction of single-family homes, to fall to the lowest level since 2014. The market will recover in 2024, they added.
Even though prices are expected to fall, people are likely to still find it hard to afford to buy a home, and more buyers will likely spill over into the rental market, Capital Economics added.
Some good news: Expect a surge in new supply next year as well, as builders complete construction on homes, which will prompt rents to fall 0.5% in 2023, they forecasted.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
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