Note: This story is part of Squeezed Out, a series from Lee Enterprises that focuses on the escalating housing crisis in the West. Across the region, costs associated with renting or buying property have skyrocketed, forcing many individuals and families to redefine the meaning of home. More than one dozen reporters, photographers and editors across the West contributed to this project.
The toilet was sinking through the rotting floor, and there was damage from standing water in the crawl space. My heart was sinking, too. The shabby, little house I was hoping to buy would take $10,000 in repairs before I could even move in.
In the short time I had been daydreaming about becoming a first-time homebuyer in Billings, Montana, the housing market had changed dramatically. Two years ago, colleagues at the newspaper where I work as a staff photographer were buying their first homes in the $180,000 range, nice little clean bungalows in tidy, working-class neighborhoods.
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Then came Covid and the in-migration of thousands of people fleeing urban chaos for the bucolic bliss of Montana. They brought with them their remote jobs and barrels of cash from the sale of their million-dollar homes in crowded cities like Seattle and Los Angeles.
In Montana university towns like Missoula and Bozeman, the already-escalating housing prices soared even more during the pandemic as homebuyers bid $50,000 to $100,000 — and in one case even $1 million — over asking price. And, they paid in cash, pushing aside anyone clutching tightly to a down payment and the promise of a bank loan.
In Bozeman, the average home price is now $900,000 and in Missoula it’s $600,000. In Billings, the average is “more affordable,” if you can call it that, at $410,000. Two years ago, the average price in Billings was $280,000.
With those kinds of prices in Billings, the housing stock available to first-time homebuyers like me is limited to a very few houses, the dwellings somewhere between a chicken coop and a ramshackle hut teetering on the verge of condemnation.
I started thinking seriously about buying a house last April, armed with $12,000 in savings for a down payment, and pre-approval from my bank for a mortgage up to $200,000. Even with the help of a state first-time home-buyer program, it took weeks of collecting tax documents, income verifications, student loan documents, credit reports, and so much more, to get the pre-approval. I was incredibly excited and my hard work was paying off. The house hunt was on and I was starting to get nervous.
Besides not having a truckload of cash, I had other home-buying disadvantages. I’m single, while most first-time homebuyers are couples with two incomes. I have a modest income of just under $40,000, and I have some immodest student loan debt.
On top of that, I’m younger than most first-time home-buyers. Currently, less than 1% of homebuyers are under age 25. I was 23 when I started house hunting and 24 when I moved in.
I started by browsing the listings obsessively, checking Zillow, Facebook, the MLS, Craigslist. In my metro area of about 168,000 people, and 47,000 houses, for the last year or so the number of homes for sale has averaged around 500, sometimes dipping to fewer than 300, according to Zillow.
Some weeks, I’d look at the only two or three houses listed in my price range. Some weeks, there weren’t any.
After looking at several very small and very old and very beaten-up starter homes, all of them too expensive for me, I pursued the sinking-toilet house with a glimmer of hope. The asking price was $210,000, and the owner wasn’t kidding in describing it as a “fixer-upper.” But, it was close enough to my downtown office that I could walk to work if I felt like it, and it was in a gentrifying neighborhood with a bright future. It was the best house in my price range in the entire city.
I bid all I had on the house and signed a buy-sell agreement with the homeowner. And then just what I feared would happen, happened. Within a day, someone topped my offer by many thousands of dollars over the asking price.
I was losing hope in the American dream of home ownership.
Growing up in rural northeast Montana, I was surrounded by lifelong homeowners. My parents were in their early 20s when they bought their first house in 1986 for $20,000. A few years later, they bought a small vacation cabin on Fort Peck Lake for $1,000.
Those five-figure house days may be over, but here I sit writing this essay in the living room of my new house. I beat the system because I have something those cash-drunk urban immigrants flooding into Montana don’t have. I have connections, and a willingness to adjust my expectations on how and where I wanted to live.
Those connections begin with my new boss and his wife, who when I moved to Billings last year let me stay rent-free in their house so I could save up down-payment money. My boss has lived here 40 years and knows everyone, including someone in real estate. That someone knew someone who was getting ready to sell her mother’s house and may be agreeable to a private deal.
There was a catch. The house was 35 miles away in Edgar, a tiny old ranch town with one bar and about 100 people. Edgar had not been on my radar, but I agreed to look at the property. I was still burning up to buy a house and saw homeownership as more than a financial investment, it was an investment in myself and my future.
Having grown up in rural Montana, I was not unfamiliar with country living and was willing to make it work. I was pleasantly stunned by the fertile agricultural beauty of the small town. The house sat on a generous lot with friendly neighbors on each side and a backyard that bordered on a cornfield.
I walked in the back door and my jaw dropped. The home had recently been remodeled and had been well cared for, a strong contrast to the other properties I had looked at. The two-bedroom, one-bathroom home had a modern country feel that instantly felt like home. With a large deck, a two-car garage, a beautiful yard, I knew it was the right move for me.
The asking price was $190,000 and that day I started the process of getting it under contract to buy. The fun part had finally begun. In the six weeks it took to close the deal I started shopping for the furnishings and necessities I would need to make it a home. And, by shopping, I really mean scavenging, because I had no more money.
I bargain-shopped at weekend estate sales, garage sales, and Facebook Marketplace. I was able to furnish my entire house for under $1,500, including finding a log bed for my master bedroom for just $160.
By the end of July, I had finally closed on my Edgar home. I learned a lot about the home-buying process and the state of the market during my journey. Perhaps more than anything, I learned the importance of using what you’ve got, flexibility and personal connections and persistence, to make your dreams come true.
Now, here I sit, a young, non-traditional buyer in my very own home. The American dream is real, and mine has a cornfield out back.
“A big incentive for investors is the rise of housing prices, after having remained flat for the last 3-4 years, pointing to good prospects for capital appreciation. The pandemic fuelled an increased interest in home ownership. And factors like low interest rates and real estate retaining its value in the backdrop of stock market volatility have all amalgamated to bode well for the residential sector,” said K Raheja Corp Homes chief executive Ramesh Ranganathan.
The depreciating rupee has led to a considerable uptick in interest from wealthy Indians and NRIs from West Asia.
“Investors have leveraged the pre-launch discounts offered by developers to encash on a buoyant market. In some key micro markets like (Gurgaon’s) Golf Course Road Extension, investors have liquidated assets with an upside of 25-30% in just one year, especially in case of investments done in plots and pre-launches,” said Shalin Raina, managing director, residential services at real estate services company Cushman & Wakefield. “Since the equity markets have been volatile, that has also contributed to making real estate a favourable investment option for investors.”
According to market participants, the growing trust of the investor community in real estate as an asset class is one of the key reasons that led the market to rebound strongly. Prior to Covid-19, investors had been steering clear of residential real estate but still focused on commercial properties, which yielded better returns.
Queensland’s Granite Belt region has gone against the grain to be one of the few areas in Australia to record an increase in house prices.
- House prices on the Granite Belt increased slightly in August
- The median price for a house in the region is $386,833
- There are predictions the rural housing market will dampen in the coming months
CoreLogic’s home value index, released this week, showed Australia’s housing market slumped 1.6 per cent in August, the biggest national monthly decline since 1983.
Property prices in regional areas also saw declines, dropping 1.5 per cent.
But house values on the Granite Belt, which includes the towns of Warwick and Stanthorpe, rose 0.5 per cent in August, with the median house price now at $386,833.
The Granite Belt has been one of the strongest housing markets in regional Australia, ranked fifth across the country over the past three months with a 4.9 per cent increase in housing values.
House prices in the Granite Belt have increased 27.7 per cent in the past 12 months.
Kylie Green is one of those people driving the figures, having recently moved to the area from the Sunshine Coast with her family to run a local motel.
Ms Green said the town’s lifestyle and friendly community made it an attractive place to move to.
“People smile at you on the street, it’s really lovely,” she said.
Ms Green said since moving to Stanthorpe, she had seen firsthand the increasing interest in the town’s property market from investors and owner-occupiers.
“We’ll get some that will come and stay at the motel that are down looking at property,” she said.
“A lot of the investors were coming down to the area knowing that it was only a couple of hours away from Brisbane, and it was being seen now as a tourist destination as well.”
Long boom led by lifestyle
Stanthorpe real estate agent Logan Steele said housing prices in the town were being driven by people looking for a different lifestyle.
He said there was a mixture of younger couples looking to get away from city living and the “retiring retired” who were looking for a country lifestyle.
“Over 30 years in the industry, I’ve never seen such a long boom as this one,” Mr Steele said.
“It’s a lifestyle choice that people are making that’s driving it all … it’s not greed.”
Mr Steele said rising interest rates were not of concern to many people buying in Stanthorpe because of the affordability of the region’s properties.
He said buyers also often had a large deposit or could buy a property outright.
Future prices may decline
A further drop in house prices over the coming months is expected across the country.
CoreLogic research director Tim Lawless said housing values in the Granite Belt had held reasonably firm, despite the recent flurry of rate hikes.
“Rural markets look to be more resilient to higher interest rates at the moment,” he said.
“However, there is a good chance that as interest rates rise further we will see housing demand dampened more broadly, including rural areas of Australia.”
Migration to the Southern Downs is also easing, with new data from the Regional Australia Institute showing the number of people moving to the region dropping by 8 per cent between the March and June quarter this year.
But Mr Steele said he expected interest in houses in Stanthorpe would continue for some time.
“As soon as we get one or two new good listings on the market that are at attractive prices, we get run over in the rush again,” he said.
There’s nothing small about a 5.4-percentage-point downward revision in a single month. For a $500,000 home, that wipes out $27,000 in anticipated home price appreciation. A revision like that only happens if the forecast inputs have soured.
“Zillow’s outlook for home prices has been revised down significantly due to a sharp downturn in July,” writes Zillow economists. Simply put: July housing data was bad—really bad.
Across the board, the housing market weakened in July. The month saw the largest ever (dating back to 2016) uptick in total inventory on realtor.com. On a year-over-year basis, new home sales and existing home sales are now down 17.4% and 20.2%, respectively. At the same time, single-family housing starts have fallen 18.5% and mortgage purchase applications are down 18.4%.
There’s another reason that Zillow might be feeling a bit more bearish: Its analysis finds some regional housing markets saw home price declines in July.
According to Zillow, 30 of the nation’s 50 largest housing markets saw month-over-month home price declines in July. That includes a 4.5% home price dip in San Jose. Not too far behind are Phoenix (-2.8%), San Francisco (-2.8%), Austin (-2.7%), and Sacramento (-2.5%).
“While the recent decline in prices is a notable development, the housing market is still far from a return to normal conditions. The current slowdown is prompted by the collision of extreme price growth during the early and mid-pandemic with the sudden increase in mortgage rates since December—a combination that swiftly weakened would-be homebuyers’ ability to afford or qualify to purchase their next house,” writes Zillow chief economist Skylar Olsen.
On multiple occasions this summer, Zillow has affirmed its view that we’re in neither a housing bubble nor a housing crash. Instead, it views this as a housing market trying to find equilibrium amid a period of spiked mortgage rates.
Normally it’s in bad taste to focus too much on month-over-month home price shifts. Right now might be an exception. Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune we should be looking at month-over-month shifts. He believes the home price drops suggest that some frothy markets, like Phoenix and Boise, have already seen their home price tops “blown off” and are on a path toward year-over-year price declines in 2023.
“You could make a strong case that in a lot of housing markets the last 10% of home price appreciation was purely aspirational and irrational, and that’ll come off the top really fast,” Palacios says. “That’s exactly what we’re all seeing right now.”
John Burns Real Estate Consulting isn’t the only firm feeling a bit bearish. Modest 2023 home price declines are also forecasted by Capital Economics, Zelman & Associates, and Zonda. Economist Robert Shiller, who predicted the 2008 housing crash, thinks home prices could decline 10%. Fitch Ratings says home prices could fall 10% to 15% if the housing downturn worsens.
The regional housing markets getting hit the hardest by the slowdown fall into one of two groups.
The first is high-cost tech hubs. This grouping includes markets like San Jose, San Francisco, and Seattle. Not only are their high-end real estate markets more rate sensitive, but so are their tech sectors. Look no further than the mounting startup layoffs.
The second group includes frothy markets like Austin, Boise, Phoenix, and Las Vegas. The Pandemic Housing Boom has pushed home prices in markets like Phoenix and Boise far beyond what local incomes would historically support. According to Moody’s Analytics, Boise alone is “overvalued” by 72%. Historically speaking, when a housing cycle “rolls over,” it’s normally the significantly “overvalued” housing markets that are at the highest risk of home price corrections. If inventory spikes are any indication, those frothy markets could very well be headed for 2023 price corrections.
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The Pandemic Housing Boom saw builders get a little greedy. Eager to turn a higher profit, homebuilders ramped up production of unsold homes. Their thinking? Builders could easily find buyers before the so-called spec homes—short for speculative house—are finished. When the housing market was hot, it went as planned. But the ongoing housing correction has flipped the script. Now, homebuilders are fearing what six months ago was unthinkable: Oversupply.
“Housing is believed to be structurally undersupplied but we run the risk of finding more homes on the market than buyers in the near-term due to cyclical factors,” Ali Wolf, chief economist at Zonda, tells Fortune. “I think there’s full awareness that in some markets, an increase in inventory may hit at a bad time—a time where demand has notably pulled back.”
There’s not only a record number of unsold homes under construction, there’s also a record number of total homes under construction. Even sold homes are a liability for builders: Spiking mortgage rates are translating into a spike in buyers pulling out of their contracts. Look no further than homebuilding giant D.R. Horton, which saw its cancellation rate jump to 24% in its fiscal third quarter ending June 30.
The 2008 housing bust remains seared into the collective memory of homebuilders. That’s why builders are wasting no time in their effort to offload homes. Heading into the summer many builders were already offering buyer incentives. But as the housing correction heated up this summer, builders turned to actual price cuts. The biggest declines are coming in frothy markets like Boise and Phoenix. Not every market has seen cuts, but the practice is widespread enough that it’s showing up in the national data. Between April and June, the median sales price of new houses fell 11.9%. On a year-over-year basis, new house prices are up just 7.4%—compared to 21.3% in April.
“Builders have found that incentives are proving to be effective in many cases. Incentives offer some money to consumers whether through closing costs funds, money towards options and upgrades, or to help buy down the mortgage interest rate. Incentives are intended to sweeten the deal for the consumer and we are seeing some buyers react accordingly by moving forward with the purchase,” Wolf says. “Other buyers are behaving with a deflationary mindset, saying ‘why would I buy now if there’s a chance home prices go down from here?’”
Earlier this summer, HousingWire lead analyst Logan Mohtashami told Fortune that higher mortgage rates would both slow down the housing market and “put builders on their ass.” As the housing cycle “turns over,” existing home inventory—which is builders’ true competition—will continue to rise. That will cause new home sales and housing starts to fall, Mohtashami says.
We’re already seeing it. On a year-over-year basis, sales of new single-family homes are down 17.4%, while single-family housing starts are down 15.7%. Simply put: Homebuilders have already been put “on their ass.”
For further proof of homebuilders’ woes, just look at the stock market. This year, shares of giant homebuilders like D.R. Horton and Lennar are down 23% and 26%, respectively. For comparison, the S&P 500 Index is down 12% during the same period.
New house price cuts raise the question: Will overall U.S. house prices decline?
Historically speaking, house price cuts always materialize first in the new construction market. Homebuilders, who lose money for every additional day they hold onto an unsold home, are more willing to relent. It’s a completely different story for homeowners: They won’t give in until market forces make them. If inventory continues to rise, sellers in some markets might finally have to relent a bit.
“We are not under the belief that home prices only go up. Historically, home prices slightly drop during more run-of-the-mill recessions but resume growth fairly quickly. Our forecast calls for a modest drop in housing prices,” Wolf says.
Record homes under construction
The record number of homes under construction could actually be what pushes U.S. house prices into the red.
Back in June, Fed Chair Jerome Powell raised the hypothetical of home price drops: “How much will it [higher mortgage rates] affect housing prices? Not really sure. Obviously, we are watching that quite carefully. You’d think over time. There is a tremendous amount of supply in the housing market of unfinished homes, and as those come online…” Powell then pivoted and said: “Whereas the supply of finished homes, inventory of finished homes for sale is incredibly low, historically low. It’s still a very tight market, and prices might keep going up for a while, even in a world where rates are up. So it’s a complicated situation and we watch it very carefully.”
But don’t pencil in a 2008-style housing crash. This time around, homeowners are less debt burdened and subprime mortgages are less of an issue. That said, had supply chain constraints not held back homebuilders, it might have been a different situation.
“Builders lucked out in that they couldn’t add as much supply as they wanted to in real-time. Because if they would have done that, we would’ve oversupplied the hell out of the market. We would be in a much different backdrop right now,” Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune.
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That’s not cheap—and homes that have their own unique look often carry an even higher price tag. If you’re willing to hunt, however, bargains can still can be found on repurposed buildings.
Most will require some repairs, whether it’s updating outdated features or something more substantial. But if you’re willing to do the work, you’ll definitely have a home unlike anyone else. Here are a few on the market today:
A lighthouse and a private island
Courtesy: Knight Frank
You’ll have to move to the U.K. to take advantage of this deal, but a Pladda Isle, a private island off the Isle of Arran on Scotland’s west coast is currently available for $426,268. You’ll also get the former lighthouse keeper’s accommodations, which has two reception rooms and five bedrooms and one bathroom. There is also a large range of outbuildings and a helipad.
You’ll have nearly 28 acres to yourself, with views of Northern Ireland and the south coast of Arran. The lighthouse, though, hasn’t been used for some time and will need upgrading.
If you’re a birdwatcher, the island is a breeding ground and stopping point for migratory seabirds.
Knight Frank is handling the listing.
The Pulaski Schoolhouse
Courtesy: Redlow Group
From 1920 to 1968, the Pulaski schoolhouse saw students from kindergarten to fifth grade pass through its halls in Winamac, Ind. It later transformed into a museum for the community and a home. Now it’s on the market again, with a listing price of just $329,000.
The brick building has four bedrooms and 2.5 baths and sits on a 1.2-acre lot, with 9,600 finished square feet (and plenty of room to expand). A 4,000 square foot Quonset hut is attached which includes a full kitchen. While the building has been converted, it still has the gymnasium and stage, as well as 12- to 13-foot ceilings and hardwood and terrazzo floors. The roof, windows, electricity, HVAC and plumbing have all been renovated within the past year.
Redlow Group is listing the property.
Dry goods store from the 1880s
Courtesy: Keller Williams Realty of Santa Fe
This building, built in 1881 and located in downtown Las Vegas (New Mexico) has served as a dry goods store, a town hall, and a jail. It’s currently a retail jewelry store, but it’s ready to be called home. Listed for $345,000, it spans 4,000 square feet (2,000 on each floor) and offers buyers the option to have an apartment above a retail shop or a larger residential property.
Keller Williams Realty of Santa Fe is handling the listing.
A Virginia log cabin
Courtesy: Hawkins Real Estate
If you don’t need a lot of living space and are craving the rustic life, this one-bedroom, 1.5-bath log cabin in Max Meadows, Va., might be more your speed. Built in 1850 and listed at $125,000, this 2,232-square-foot getaway sits on 5.1 acres. It’ll require a fair bit of work, as you might have guessed from the price. The exterior logs are in place, and electrical and plumbing are roughed in, but you’ll have to do the rest.
The cabin is close to hiking trails, rivers and the Foster Falls, a plunging waterfall with a pool at the bottom.
Diane Hawkins of Hawkins Real Estate is the listing agent.
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That raises the question: Why does Zillow remain so bullish?
A lot of it boils down to supply. Between the first week of January and the first week of July, inventory levels on Zillow.com jumped 18%—going from 546,800 listings to 642,800 listings. Even with that jump, we’re still in a historically tight market. Inventory remains 54% below the 1.4 million active listings we had in July 2019. As long as inventory remains scarce, it’ll make it unlikely that existing home prices will fall.
That said, this latest Zillow forecast does mark another downward revision. In the face of weakening housing data, Zillow cuts its year-over-year home price outlook from 9.7% to 7.8%. That’s the fourth consecutive month that Zillow has issued a downward revision.
“The housing market is quickly rebalancing from what had been arguably the strongest sellers market in decades, with inventory rising and competition for homes easing in the face of significant affordability challenges. The rebalancing is expected to continue given current macroeconomic headwinds,” write Zillow researchers.
Nationally, Zillow foresees 7.8% house price growth over the coming 12 months. But regionally, it’ll vary—a lot.
Among the 911 regional housing markets that Zillow economists analyzed, 906 markets are predicted to see rising house prices between July 2022 and June 2023. Zillow only expects five markets to experience year-over-year declines. The biggest forecasted decline being 6.4% in Greenville, Miss.
Over the coming year, Zillow predicts that 741 markets will see house price growth of 5% or greater. While 136 markets are forecasted to see year-over-year house price growth of 10% or greater. That includes markets like Athens, Ga. (10.3% forecasted growth); Durango, Colo. (10.3%); Grenada, Miss. (10.3%); Fort Myers, Fla.(10.2%); and Morristown, Tenn. (10.2%).
Keep in mind some of this home price growth is already baked in. On the data collection end, home transactions lag. Many of the home sales that will go final in August and September actually occurred back in June and July.
Over the coming year, Moody’s Analytics forecasts that U.S. house prices will remain unchanged. That’d mark the lowest level of home price appreciation since 2011. But that’s nationally. On a regional level, Moody’s Analytics foresees around half the nation experiencing falling home prices.
Earlier this week, Fortune reached out to Moody’s Analytics to get access to its latest proprietary housing analysis. Researchers at the financial intelligence firm calculated how house prices are likely to shift in over 400 regional housing markets between the fourth quarter of 2022 and the fourth quarter of 2024.
Among the nation’s 414 largest housing markets, Moody’s Analytics predicts that 204 regional housing markets will see rising home prices over the next two years. Meanwhile, Moody’s Analytics expects 210 markets to see falling home prices. The steepest declines, Zandi says, will come in housing markets like Boise and Austin that are significantly “overvalued” relative to underlying economic fundamentals. If a recession comes, those markets could see prices fall by as much as 15% to 20%.
Average housing price rose up to 15 per cent during April-June period across 9 major cities, with Chennai witnessing the highest appreciation of 15 per cent, according to data analytic firm PropEquity.
The weighted average price rose by 15 per cent in Chennai to ₹6,744 per square feet in the June quarter from ₹5,855 per square feet in the year-ago period.
Gurugram and Hyderabad witnessed 12 per cent increase in prices to ₹11,517 per square feet and ₹6,472 per square feet, respectively.
The average prices in Noida rose 9 per cent to ₹7,411 per square feet from ₹6,791 per square feet, while the prices in Bengaluru were up 8 per cent to ₹6,196 per square feet from ₹5,760 per square feet.
Housing prices in Mumbai, Thane, and Pune increased by 3 per cent.
In Mumbai, the prices of residential properties rose to ₹18,896 per square feet from ₹18,259 per square feet, while in Thane, the rates appreciated to ₹6,325 per square feet from ₹6,165 per square feet.
Housing prices in Pune increased to ₹5,348 per square feet from ₹5,189 per square feet.
Kolkata witnessed the minimum increase of 1 per cent in the average housing prices to ₹5,431 per square feet in April-June 2022 from ₹5,355 per square feet in the same period last year.
“Residential market has been witnessing steady growth in sales and price appreciations over the last one year,” Samir Jasuja, Founder and MD of PropEquity, said.
As per the data, the housing sales rose 96 per cent year-on-year to 93,153 units during the June quarter this year. Sales, however, dropped 7 per cent from the previous quarter.
Total units launched across the top 9 cities rose 51 per cent annually to 69,813 units during the April-June period, but fell 24 per cent from the previous quarter.
The unsold housing inventory dropped 11 per cent annually to 4,05,586 units in the June quarter. The fall was 5 per cent from the previous quarter.
Mumbai-based realty firm, Kalpataru Ltd, which is developing many projects in Mumbai and Thane, Director-Sales Mukesh Singh attributed the rise in housing sales and prices in Thane to a higher demand.
“Over the past decade, Thane has transformed into a bustling metropolis. The city is in the midst of infrastructure and connectivity transformation, which is expected to appreciate property prices and rentals,” he said.
As per the PropEquity data, housing sales in Thane more than doubled to 22,966 units during the June quarter from 10,878 units in the corresponding period of the previous year.
Housing sales in Pune doubled to 21,927 units from 10,829 units, while sales in Mumbai rose 98 per cent to 11,733 units from 5,929 units.
Hyderabad saw 77 per cent increase to 14,457 units from 8,176 units. Bengaluru witnessed 119 per cent increase to 13,324 units from 6,088 units. The sales of apartments in Chennai rose 45 per cent to 3,453 units from 2,374 units. Kolkata saw 56 per cent growth in sales to 3,103 units from 1,988 units.
In Delhi-NCR, Gurugram witnessed 57 per cent rise to 1,205 units from 769 units, while Noida saw 87 per cent growth to 1,010 units in the April-June period from 539 units last year, the data showed.
July 27, 2022
The Federal Reserve increased the key interest rate hikes in an effort to address the record-high inflation. But how does this impact homebuyers?FEDERAL RESERVE:The central bank announced a rate increase of .75% on Wednesday. It’s the first time since 1994 that the Fed has raised the rate that much. The three-quarter-point hike brings the federal funds rate to between 1.5% and 1.75%. The federal funds rate dictates what it costs for banks to borrow money from each other. And generally, higher interest rates typically mean it’s more expensive for consumers to get a mortgage, obtain a loan to buy a vehicle, and to carry a balance on a credit card.Following this announcement, experts anticipate consumer spending will decrease and the demand for goods — one of the drivers of inflation — will slow down.The Federal Reserve’s announcement comes during a time when the United States is seeing an extremely low inventory of houses and prices for homes are climbing.So what is it like to sell and buy a home in the current market?REAL ESTATE EXPERT:WXII 12 News talked with Thomas Maier, office manager for Berkshire Hathaway Home Services Carolinas Realty in Winston-Salem, on Wednesday. He’s worked in the real estate industry for 16 years.He said the current listing of houses in the greater Winston-Salem area is currently down 12% compared to the first five months of 2021. The current active inventory, he added, is down roughly six percent compared to May of 2021.Despite the rising interest rates, Maier said the demand to purchase homes still remains strong.Maier shared there is a seven-month supply of homes available, identical to May 2021. “If not another home hit the market here locally in our greater Winston market, we would be sold out in a matter of 21 days. We would be totally out of houses,” he said.The median sales price in May 0f 2022 was $284,450 — an all-time high, and is more than 20% higher than May of 2021. The average sales price in May of 2022 was $312,984 — another record high.If a house was accurately priced and there were no price adjustments, it would be on the market for only seven days — an all-time low, Maier said. Maier added that it’s currently a seller’s market. While high-interest rates may dwindle the buyer’s pool, he said the demand to buy homes is still too great.”The rates haven’t gotten high enough that it’s necessarily stopping people from buying homes because the demand is so low,” he shared. “Even if there’s less buyers in the market, the amount of inventory that is out there is still creating a demand for these houses.”Maier said many factors are impacting the housing market, including companies, hedge funds, and private equity firms that are purchasing houses. He said these firms typically are able to deliver a larger offer compared to other personal buyers — which greatly impacts a buyer’s ability to purchase a home, especially first-time homebuyers.”My fear is that some of the institutional investors are driving prices up at a rate that are making some of our affordable neighborhoods less affordable,” he said.As home mortgage rates approach or hit six percent, Maier said the rate is still considered not too high — compared to rates in the past.”In ’82, rates were 18%. When I got into the business in 2007, they were 6.5 percent. And people said they were historically low. I think we have been living in a false reality that three to four percent rates are the norm. I personally believe we’ll never see that in our lifetime again, maybe the fours,” Maier said.However, the main driver that’s causing the steep housing prices is the low housing inventory the nation is facing, Maier said.”There is such low inventory. People are having to throw these ridiculous offers to get a home. And each time they do that, they’re setting a new plateau for that neighborhood and that affects the next buyer that wants to make an offer,” he said.HOMEBUYER AND HOME SELLER: To better understand how the current housing market and interest rates are impacting people who are actively buying or selling a house, WXII 12 News talked with Ben Beason.Beason and his family are moving to Winston-Salem after they have sold their first home in Charlotte in January.Beason said his family bought their house in Charlotte during the pandemic with a 2.75% mortgage rate.When his family decided to sell their house, he said they had 60 showings and received 20 offers above their asking price.”We had a blast selling,” he said. “It’s kind of disorienting going from that to buying — to the complete opposite end. It’s wild. It’s stressful.”Beason’s experience when it came to buying a home was a complete 180.Beason said he and his wife saw mortgage rates climb significantly higher in a span of several months.”The first interest rate we got when we moved to Winston-Salem four months ago, until now, it significantly went up. Our monthly payment from what it would have been if we bought when we first to now is significantly more,” he shared.Beason said while Winston-Salem houses were priced cheaper than houses in Charlotte, Winston-Salem had “so low inventory. We would go through a few weeks with nothing we would see on the market that we’d like.”Beason and his wife had considered holding off.”Do we need to rent until things cool down? And then there’s the question, are things ever going to cool down?” Beason said.But they found more clarity in their questions.The Beasons are expecting to close on a house in Winston-Salem next month.
The Federal Reserve increased the key interest rate hikes in an effort to address the record-high inflation. But how does this impact homebuyers?
The central bank announced a rate increase of .75% on Wednesday. It’s the first time since 1994 that the Fed has raised the rate that much.
The three-quarter-point hike brings the federal funds rate to between 1.5% and 1.75%. The federal funds rate dictates what it costs for banks to borrow money from each other. And generally, higher interest rates typically mean it’s more expensive for consumers to get a mortgage, obtain a loan to buy a vehicle, and to carry a balance on a credit card.
Following this announcement, experts anticipate consumer spending will decrease and the demand for goods — one of the drivers of inflation — will slow down.
The Federal Reserve’s announcement comes during a time when the United States is seeing an extremely low inventory of houses and prices for homes are climbing.
So what is it like to sell and buy a home in the current market?
REAL ESTATE EXPERT:
WXII 12 News talked with Thomas Maier, office manager for Berkshire Hathaway Home Services Carolinas Realty in Winston-Salem, on Wednesday. He’s worked in the real estate industry for 16 years.
He said the current listing of houses in the greater Winston-Salem area is currently down 12% compared to the first five months of 2021. The current active inventory, he added, is down roughly six percent compared to May of 2021.
Despite the rising interest rates, Maier said the demand to purchase homes still remains strong.
Maier shared there is a seven-month supply of homes available, identical to May 2021.
“If not another home hit the market here locally in our greater Winston market, we would be sold out in a matter of 21 days. We would be totally out of houses,” he said.
The median sales price in May 0f 2022 was $284,450 — an all-time high, and is more than 20% higher than May of 2021. The average sales price in May of 2022 was $312,984 — another record high.
If a house was accurately priced and there were no price adjustments, it would be on the market for only seven days — an all-time low, Maier said.
Maier added that it’s currently a seller’s market. While high-interest rates may dwindle the buyer’s pool, he said the demand to buy homes is still too great.
“The rates haven’t gotten high enough that it’s necessarily stopping people from buying homes because the demand is so low,” he shared. “Even if there’s less buyers in the market, the amount of inventory that is out there is still creating a demand for these houses.”
Maier said many factors are impacting the housing market, including companies, hedge funds, and private equity firms that are purchasing houses. He said these firms typically are able to deliver a larger offer compared to other personal buyers — which greatly impacts a buyer’s ability to purchase a home, especially first-time homebuyers.
“My fear is that some of the institutional investors are driving prices up at a rate that are making some of our affordable neighborhoods less affordable,” he said.
As home mortgage rates approach or hit six percent, Maier said the rate is still considered not too high — compared to rates in the past.
“In ’82, rates were 18%. When I got into the business in 2007, they were 6.5 percent. And people said they were historically low. I think we have been living in a false reality that three to four percent rates are the norm. I personally believe we’ll never see that in our lifetime again, maybe the fours,” Maier said.
However, the main driver that’s causing the steep housing prices is the low housing inventory the nation is facing, Maier said.
“There is such low inventory. People are having to throw these ridiculous offers to get a home. And each time they do that, they’re setting a new plateau for that neighborhood and that affects the next buyer that wants to make an offer,” he said.
HOMEBUYER AND HOME SELLER:
To better understand how the current housing market and interest rates are impacting people who are actively buying or selling a house, WXII 12 News talked with Ben Beason.
Beason and his family are moving to Winston-Salem after they have sold their first home in Charlotte in January.
Beason said his family bought their house in Charlotte during the pandemic with a 2.75% mortgage rate.
When his family decided to sell their house, he said they had 60 showings and received 20 offers above their asking price.
“We had a blast selling,” he said. “It’s kind of disorienting going from that to buying — to the complete opposite end. It’s wild. It’s stressful.”
Beason’s experience when it came to buying a home was a complete 180.
Beason said he and his wife saw mortgage rates climb significantly higher in a span of several months.
“The first interest rate we got when we moved to Winston-Salem four months ago, until now, it significantly went up. Our monthly payment from what it would have been if we bought when we first to now is significantly more,” he shared.
Beason said while Winston-Salem houses were priced cheaper than houses in Charlotte, Winston-Salem had “so low inventory. We would go through a few weeks with nothing we would see on the market that we’d like.”
Beason and his wife had considered holding off.
“Do we need to rent until things cool down? And then there’s the question, are things ever going to cool down?” Beason said.
But they found more clarity in their questions.
The Beasons are expecting to close on a house in Winston-Salem next month.