While home prices are rising across the country, Texas metro areas like San Antonio and Austin, once the poster child for the pandemic’s booming housing market, are still experiencing modest declines, according to the latest data from Zillow.
National home prices were up by 0.3 percent in February from a month earlier, and 4.2 percent higher year on year, but in San Antonio they were mostly unchanged between January and February, and they were down by 2.5 percent compared to a year before. In the former pandemic boomtown of Austin, home prices were up 0.3 percent in February month over month, but still down by 5.1 percent year over year.
The latest data, updated to February 29, show an even steeper drop compared to last year’s numbers. In San Antonio, the average value of a home was $253,762, down 2.8 percent. In Austin, it was $533,719, down 6.2 percent.
The drop in home prices was even more striking in these metro areas compared to their peak in 2022. From then, San Antonio home prices have tumbled by 7.5 percent, while in Austin they are down by a staggering 20.4 percent.
San Antonio, Austin and New Orleans, Louisiana, were the only metro areas out of a list of 50 of the U.S.’s largest metropolitan housing markets analyzed by Zillow where home prices went down in February. In New Orleans, prices fell 0.1 percent in February, month over month, and they were down by 7.5 percent year on year.
The three metro areas are still suffering the impact of a price correction that began in the U.S. in late summer 2022, when demand began to slide following the rise in mortgage rates due to the Federal Reserve’s aggressive rate-hiking campaign to control surging inflation. While this correction seemed to find an end in spring 2023 across the country, as pent-up demand and low inventory kept prices from plummeting, Austin and New Orleans in particular have continued seeing drops.
Home prices are currently declining across Texas as the state has built the highest number of new homes in the country, together with Florida. In the Lone Star State, the average home value was $298,624 as of February 29, according to Zillow, down 0.1 percent compared to a year before—though sales haven’t risen to match this decline, according to Texas REALTORS’ data.
“While rising inventory in most markets should offer buyers more options in 2024, fluctuations in mortgage rates continue to affect buyers’ decisions to invest in real estate. We’re hoping to see lower interest rates by the end of this year,” Jef Conn, chairman of Texas REALTORS, previously said in a statement to Newsweek.
“Higher mortgage rates deterred some buyers in 2023, but even so, the overall median price of homes in Texas saw only a slight decline, 1.4 percent, compared to 2022, with the majority of metro areas seeing slight median price increases. Real estate is very localized, so certain markets are experiencing very different trends than Texas as a whole is seeing. Realtors can help buyers make sense of the state of their specific market and guide them through the best decisions for their situation.”
While San Antonio and Austin showed significant drops from February 2023, other metro areas in Texas have seen prices going up. In Dallas, home prices climbed 0.5 percent in February, month over month, and 1.3 percent year on year. In Houston, they’ve gone up by 0.3 percent in the month and 1.2 percent year over year. Compared to their peak in 2022, prices in these metro areas were down, respectively, by 5.7 percent and 3.8 percent.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Would you be willing to save a few hundred dollars on a car purchase if the seller seemed squirrely and didn’t have the title to the car?
Unfortunately, you will be on the hook for Joe Biden’s latest vote buying scheme to subsidize mortgages for houses with shaky titles.
In his State of the Union address, Biden proclaimed, “My administration is also eliminating title insurance on federally backed mortgages.” What could possibly go wrong?
Title insurance protects homeowners against financial loss if there is a defect in the title to their property.
“Wrecking ball benevolence” — my phrase in a 2004 Barron’s article that was quoted in a 2017 federal appeals court decision — leveled the housing sector.
As Rep. Patrick McHenry (R-NC), chairman of the House Financial Services Committee, declared in 2013, “Rank cronyism, Enron-style accounting and outright financial fraud made [Fannie and Freddie] so powerful and unaccountable that they were able to wreck our economy.”
Despite the debacles earlier in this century, Team Biden is championing “no clean title, no problem” mortgage loans.
Biden policymakers believe they are so smart that they can turbo-charge housing demand while removing the guardrails — and nothing bad will happen (except Biden’s reelection).
In lieu of title insurance, the Biden administration will approve granting subsidized mortgages based on “attorney opinion letters” that assert a lawyer believes someone owns a house.
Such form letters can now be purchased for $199 in some locales. This sounds on par with the $99 online deals selling “emotional support animal letters” people exploit to “prove” they need their dog, cat, kangaroo or squirrel with them at all times.
Having a page of pablum on fancy law-firm letterhead will be no competition for a clean deed — or a tangled land dispute that could go back generations.
A recent report by FundingShield found that home title fraud risk “reached an all-time high” late last year.
The title insurance waiver is part of a blizzard of housing interventions to portray Biden as a savior.
But foolish federal policies have made homes less affordable than ever before.
Subsidized mortgages helped send home prices skyrocketing in recent years, along with the Federal Reserve artificially suppressing interest rates.
Since Biden took office, the average monthly mortgage payment for new home has almost doubled, reaching $3,322 per month.
Not to worry: Uncle Joe is on the case! The White House announced on March 7 that “President Biden believes housing costs are too high.”
Biden is also pushing Congress to approve a $10,000 tax credit for middle-class, first-time homebuyers, a $25,000 handout for down payments for first-generation home buyers and a $10,000 tax credit to “middle-class families who sell their starter home, defined as homes below the area median home price in the county, to another owner-occupant.”
Why not also provide a $5,000 grant for homes with lawn signs for Democratic candidates?
Who entitled the Biden White House to pick winners and losers in the housing market?
Almost all of Biden’s housing “reforms” are in the direction of greater recklessness.
There was a brief uproar last year when Team Biden announced that home buyers with good credit scores will be forced to subsidize buyers with bad credit.
But that was only the tip of the iceberg. Author and appraiser Jeremy Bagott warns that thanks to Biden policies, Fannie and Freddie “have been pushing to eliminate critical checks and balances in a radical experiment with US taxpayers’ money and the US economy . . . scrapping or weakening long-accepted underwriting safeguards like standard FICO scoring, title insurance, mortgage insurance, downpayments and appraisals.”
Biden administration officials sanctify their power grabs by prattling about closing the racial homeownership gap.
But minorities cannot afford any more favors from Washington. The 2008 housing crash slashed in half the average net worth of black and Hispanic households, setting millions of people back an entire generation.
More families lost their homes during the 2008 housing crash than lost homes during the Great Depression in the 1930s.
Rather than waiving title insurance for federally backed mortgages, the feds should finally pull the plug on Fannie and Freddie.
Those entities have officially been in “federal conservatorship” since their 2008 bankruptcy. They should have been euthanized long ago.
Biden’s latest proposals vivify how Washington policymakers learned nothing from their previous housing debacles.
There is no reason not to expect politicians and bureaucrats to again whipsaw the housing market they claim they’re rescuing.
Unfortunately, reckless economic policies can be good politics as long as the damage does not surface until after the next election.
James Bovard’s latest book is “Last Rights: The Death of American Liberty.”
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Of all the things that have changed since the coronavirus pandemic began in 2020, one of the most drastic is the residential real estate market.
In 2020, according to a new report from real estate company Zillow, a household earning $59,000 annually could comfortably afford the monthly mortgage on a typical U.S. home, spending no more than 30 percent of its income with a 10 percent down payment.
That was below the U.S. median income of about $66,000, meaning more than half of American households had the financial means to afford homeownership.
Now, the average U.S. home shopper needs to make more than $106,000 to comfortably afford a home.
That’s a difference of more than $47,000 in just four years. Or, put another way, the income needed to comfortably afford a home is up 80 percent since 2020, while median income has risen just 23 percent in that time.
In Austin, it’s even more expensive, but about the same increase.
As of January 2024, Zillow has calculated $149,267 as the necessary income benchmark for home affordability here. That’s about a 77 percent increase of $65,144 from 2020, using Zillow’s Home Value Index to estimate the typical Austin home price of $451,322.
Assuming a 10 percent down payment, Zillow’s monthly mortgage payment in Austin hovers around $2,880 (compared to the U.S. average of $2,188).
That monthly mortgage payment on a typical U.S. home has nearly doubled since January 2020, up 96.4 percent. Home values have risen 42.4 percent in that time, with the typical U.S. home now worth about $343,000.
Mortgage rates ended January 2020 near 3.5 percent, keeping the cost of a home affordable for most households that could manage the down payment. At the time of Zillow’s analysis, mortgage rates were about 6.6 percent.
Elsewhere in Texas, Dallas has also soared past the $100K mark to $121,398 needed in income for a $2,340 monthly mortgage on a $366,690 home.
Houston is on the “affordable” side of the report, with a yearly income of $95,374 necessary to afford a $300,955 home, paying $1,920 monthly after 10 percent down.
San Antonio is also nearby on the list: You’d need to earn $95,767 yearly to afford a $283,161 home, paying only $1,807 a month.
California, not surprisingly, requires the highest incomes: San Diego ($273,613) and Los Angeles ($279,250) seem downright cheap compared to San Francisco ($339,864) and San Jose ($454,296), where the latter will expect you to plunk down nearly $1.5 million for a home and pay almost $10,000 a month in mortgage.
Seattle and New York round out the eye-popping top of the list, while Pittsburgh, Memphis, Cleveland, and New Orleans are deemed the most affordable. Only Pittsburgh is close to 2020’s numbers, requiring $58,232 in income for a $1,286 monthly mortgage.
Americans pay roughly $100 billion in real estate commissions each year, but that burden is about to be lightened considerably. The National Association of Realtors, one of the country’s largest industry associations, reached a settlement Friday morning over an alleged “conspiracy” to inflate realtors’ commissions. The settlement could slash real estate agents’ commissions by up to 30% over time and reduce the total number of real estate agents considerably, according to some industry analysts.
NAR, which boasts 1.5 million members, has agreed to pay $418 million in damages to settle a wide range of lawsuits in courts across the nation, including the shocking $1.8 billion verdict awarded by a Missouri jury last October, which found that NAR and two other real-estate brokerages were conspiring to inflate home-sales commissions. That verdict gave rise to a dozen other antitrust lawsuits against NAR.
The suits have alleged that the organization inflated commissions by forcing sellers’ agents to make an upfront payment offer to buyers’ agents, and implementing rules that led to standard commissions across the industry.
As a part of Friday’s settlement, NAR said it will eliminate key commission rules, prohibit offers of broker compensation on the Multiple Listing Service (MLS), the private database where real estate professionals list homes, and require MLS participants working with buyers to enter into written contracts. The changes will go into effect mid-July 2024, pending court approval, and will fix what many consumer advocates have long argued is a major problem for the real estate industry.
For decades, it’s been standard practice for real estate sellers to set buyers’ agents fees—sellers typically give their own agent a commission of about 6%; if the buyer of the property has an agent, the two agents split the commission. But economists note that this prevents buyers from negotiating and shopping around for lower-cost agents, which keeps commissions elevated and reduces the incentive for buyers’ agents to negotiate lower prices for their clients.
This arrangement is one of several costly features of U.S. real-estate sales that Richmond Federal Reserve Bank economists Borys Grochulski and Zhu Wang described as “puzzling” and an “anomaly” in a recent paper. The pair put forward a potential “a la carte” model for real estate commissions that could hand roughly $30 billion back to Americans each year. Now, at least part of their suggestion is likely to become reality.
NAR’s Interim CEO, Nykia Wright, said that the decision to settle and pay damages in regards to these lawsuits came down to avoiding further damage to realtors’ businesses. “Ultimately, continuing to litigate would have hurt members and their small businesses,” she said in a statement. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances.”
NAR highlighted a few wins from the settlement, including the release of most of its members from liability “in these matters,” and the fact that the old “cooperative compensation” model for real estate agents still remains a choice for consumers, although it’s no longer mandatory. NAR also said that it “continues to deny any wrongdoing” in connection with its MLS “cooperative compensation model.”
The organization’s president, Kevin Sears, followed up those comments by admitting that “the settlement comes at a significant cost,” but he noted he believes the benefits are worth it.
“This will be a time of adjustment, but the fundamentals will remain: buyers and sellers will continue to have many choices when deciding to buy or sell a home, and NAR members will continue to use their skill, care, and diligence to protect the interests of their clients,” he said.
NAR representatives did not immediately respond to Fortune’s calls to request comment.
The number of “motivated sellers” in Florida has grown in the past two weeks, as more homeowners are trying to offload their properties quickly amidst a worsening of the state’s insurance crisis.
As of Wednesday morning, 204,833 properties, including single-family and multi-family homes, apartments, condos, townhomes, and lots, were listed for sale on Zillow. Of these, 5,244 were listed by self-described motivated sellers—homeowners and agents willing to accept a lower offer than the price listed on their ads.
When Newsweek reported on the issue on February 28, there were 4,928 listings in Florida of properties whose sellers described themselves as motivated sellers out of a total of 202,000.
The Sunshine State’s number of motivated sellers on Zillow remained much higher than in other states like California and Texas. As of Wednesday morning, California had 1,032 motivated sellers for a total of 74,792 properties listed, while Texas counted 1,829 out of a total of 1818,888.
In California, the number of motivated sellers trying to offload their properties is now lower than a couple of weeks ago, when they were 1,069 out of a total of 73,000 listings, while in Texas, it has grown. On February 28, Texas counted 1,775 motivated sellers out of a total of 172,000.
Both Florida and Texas have grown their active housing inventory in the last year, with both states building more new homes than the rest of the country.
Matthew Walsh, Moody’s Analytics housing economist, previously told Newsweek that Texas and Florida are the two states that, in absolute terms, started construction on the most units in 2023. In per capita terms, he said, Idaho, North Carolina and Florida led the U.S. in new home construction over last year.
According to data shared on ResiClub, Florida’s active home-for-sale inventory increased by 45.8 percent year-over-year in February, while Texas’s increased by 22.8 percent. At a nationwide level, inventory rose by 15.0 percent in the same period. However, active inventory was still down by 40 percent compared to the pre-pandemic level (February 2019).
According to these estimates, Florida had the biggest shift in active housing inventory for sale compared to any other state.
Newsweek reached out to Florida REALTORS for comment via email on Wednesday.
The high number of motivated sellers in Florida might be explained, in part, by the skyrocketing home insurance premiums in the state. In the past three years, the cost of home insurance has grown by 102 percent, according to the Insurance Information Institute (Triple-I), as the risk posed by extreme weather events is rising. Several private insurers have left the state or have stopped offering new policies.
But some homeowners might also be willing to “cash in” after years of home appreciation, Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors (NAR), previously told Newsweek.
“Florida had the highest home price appreciation over the past three years, and some people may be cashing out,” he said.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
It’s the Canadian way to believe in houses as an investment.
In a recent RE/MAX poll, 73 per cent of participants said they believe home ownership is the best investment they can make in 2024, a similar number to last year. Now for a reality check.
The national average housing price peaked at $816,720 in February, 2022, and then sank to $659,395 in January of this year. This drop of 19.3 per cent doesn’t kill the idea of houses as investments narrative, but it does offer some perspective.
Expect to hear a lot about housing this spring. Affordability for first-time buyers can only be described as awful, even if prices are well off the peak levels of a few years ago. Meanwhile, mortgage rates have edged lower and there are signs of revival in the housing market in several cities. Properties are selling faster and there’s even talk of bidding wars in Toronto.
Economic conditions on the surface don’t seem conducive to a housing rally – interest rates remain high, living costs are a challenge for many, late debt payments and defaults are on the rise and economic growth is barely perceptible. Demand for housing is partly fed by population growth and the natural flow of people buying property and starting families. But the RE/MAX poll suggests that another factor driving sales is the view of houses as investments.
One of the basic rules of selecting investments is that past returns are an imperfect indicator of what’s to come. Housing has been excellent in the past – the average annual increase in the national average resale price the past 10- and 20-year periods is roughly 6 per cent, according to Canadian Real Estate Association data. If a home is your principal residence, that gain is tax-free. But even with high levels of immigration, there’s reason to question if housing prices can keep up that pace of growth in a slow-growing economy where borrowing costs remain high.
The best investment you can make this year is in a diversified portfolio of bonds and Canadian, U.S. and international stocks that you hold for at least 10 years. Houses may outperform, but at what cost? Ten more years of 6 per cent annualized growth in house prices would give us a national average resale price of $1.2-million. At that point, houses turn into luxury goods.
The RE/MAX poll offers some insight into how people will afford homes both now and in the future. Almost half of participants said they would consider alternative ownership models like buying with friends or family, buying a home with a rental unit or a rent-to-own arrangement.
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Rob’s personal finance reading list
The inevitability of hot housing
Bidding wars are back in Toronto. I’ve been asked a few times lately what’s ahead for housing and right now I’m seeing signs that the slump of the past year or so is over. Now for a look at the cities with the highest percentage of houses listed for sale at or above $1-million.
Cheapest cars in Canada
I was surprised to find two vehicles still under $20,000, and a few others around $25,000. The average vehicle price these days is close to $46,000.
The investment case for gold
Gold prices have soared recently, and that means more chatter about the benefits of adding exposure to gold to an investment portfolio. I can’t see the point of gold myself because it’s so unpredictable, but many would disagree.
The battle for Rocco Jr.
A court case that involved custody of a deceased owner’s pet dog is a reminder to consider your pets when writing a will. The dog involved is a bull terrier named Rocco Jr.
Ask Rob
Q: I wonder if you plan to review the Wise card?
A: The Wise card is a great way to cut the cost of foreign exchange when paying for purchases outside Canada. I wrote about Wise in a column last year.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools, explainers, guides and charts
“Can someone please explain GICs to me?” – a Reddit thread
The Money-Free Zone
As I was cueing up a Willie Hutch song for today, I heard that Eric Carmen died. Mr. Carmen’s opus All By Myself pretty much defines the mellow rock popular back in the 1970s. Mr. Hutch was a soul/R&B singer on the Motown label whose creative peak was happening while All By Myself played endlessly on AM radio. His soundtracks for the movies Foxy Brown and The Mack are great from top to bottom, but the song I Choose You stands out for its shining production and vocals. It’s been sampled a bunch of times by other musicians.
Watch this
Important stuff to know about buying a home with a friend or family member.
On social media
Food inflation in February – pass the Tums.
In case you missed these Globe and Mail personal finance-related stories
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be child-free or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You’re not bad at money – you’re suffering from money shame • Retirement might look different for Gen Z and millennials. Here’s how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada’s top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer’s guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
At different stages of the pandemic, the housing scene morphed from a buyers’ market to a sellers’ market—and sometimes back again—with lightning speed. But as of about a year now, it’s not much of a market at all since the market went into a deep freeze with historically low levels of homes changing hands. Plus, mortgage rates hit their highest level for nearly 40 years and are set to stay “higher for longer.” That’s all led to what experts have called the “lock-in effect,” and it has resulted in gridlock for months on end.
But President Joe Biden wants to get things moving. “I know the cost of housing is so important to you,” Biden said during his State of the Union address last week. “If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting.” And he’s taking action, but will it be enough?
The White House is proposing some relief for homeowners: a one-year $10,000 tax credit for middle-class, starter-home residents who feel locked in to their low mortgage rates to move to a bigger home. By White House estimates, this should open up 3 million starter homes for those desperately trying to break into the housing market.
Along with the seller tax credit, Biden proposed a swath of housing-related programs including a first-generation down payment assistance program, housing voucher program expansion, and rental assistance for low-income households.
The White House spoke to Fortune after Biden’s address, with Deputy Treasury Secretary Adewale Adeyemo saying it bluntly: “We have a supply challenge in the economy. Since the financial crisis, we’ve built too little housing here in the United States.”
He was echoing the remarks of Fed chair Jerome Powell himself, who had recently testified to Congress about the economy and concluded, “The housing market is in a very challenging situation right now.”
So will Biden’s proposals move the needle?
Not everyone is convinced that the new seller-focused tax incentive proposal will have the desired effects of making housing attainable for lower-income families and younger generations. While $10,000 will be “nothing to sneeze at” for some families who will be forced to move this year regardless of home prices and mortgage rates, it likely won’t be enough to meaningfully move the needle on transaction activity, writes Bloomberg columnist Jonathan Levin.
“The so-called ‘mortgage lock-in’ effect for existing homeowners, who enjoy low and fixed monthly payments, is still far too powerful to undo given the size of the proposed incentive,” Levin wrote.
How much does a starter home cost in the U.S.?
Housing affordability in the U.S. has gotten so bad that first-time buyers have to make 13% more than they did in 2022, according to a July 2023 Redfin report. That’s because a typical starter home in the U.S. now costs a record $243,000—which is a whopping 45% more than pre-pandemic starter home prices.
Home prices like this have left first-time homebuyers “on a wild goose chase because in many parts of the country, there’s no such thing as a starter home anymore,” Sheharyar Bokhari, Redfin senior economist, said in the report. “The most affordable homes for sale are no longer affordable to people with lower budgets due to the combination of rising prices and rising rates.”
The lock-in effect, therefore, has disproportionately affected younger generations like millennials and Gen Zers who would typically be scooping up starter homes by this time in their life. Yet these generations are still the most housing-obsessed, according to a December 2023 Bank of America report that shows some 60% of Gen Z respondents, and nearly 60% of millennials, said they think homeownership is more important than it was during their parents’ generation.
While Biden’s tax credit proposal for sellers could have the same effect as a 1.5% mortgage rate reduction, it could actually irritate one of the other major issues facing the housing market today: low inventory levels.
“This proposal would increase demand for starter homes, which are already in short supply, thereby driving up prices,” Edward J. Pinto, a senior fellow and codirector of right-wing think tank AEI’s Housing Center. “In addition, many of the 3.5 million beneficiaries would have been able to buy a home without the credit. However, since money is fungible, these families will have additional purchasing power to bid up the price of homes.”
What’s more is that the Biden tax credit could have the unintended consequence of opening up more small homes for baby boomers looking to downsize during the next few years, since the same starter homes that the household-forming fortysomethings want are also ideal for downsizing grandparents.
“There’s a big overlap between select baby boomers and select millennials,” Ali Wolf, chief economist at Zonda, a distributor of housing market data and consulting, previously told Fortune. “The key difference here is that the baby boomer will likely be able to tap home equity by selling their existing home, allowing them to perhaps make a more compelling offer on the home compared to the millennials, especially if the latter group are still renting.” In other words, baby boomers are more likely to win the housing market with more cash on hand.
Whether Biden’s housing tax credit for sellers is effective may end up being a moot point if it’s denied by Republican legislators—and it could be unlikely we’ll see meaningful change during an election year.
“It remains unclear which of these policies are most likely to succeed in Congress in this hotly contested election year,” Nick Luettke, Moody’s Analytics associate economist, said in a statement. “Housing affordability has become a key issue for Americans spanning all demographics and political divides, and housing policy has mostly remained steady in recent congressional budgets.”
Home sales in Texas fell to the lowest level in seven years in 2023, as persistently high mortgage rates kept buyers out of the market even as prices dipped modestly compared to 2022, according to a recent report by Texas REALTORS.
Sales plunged by 11 percent last year, the report found, with a total of 327,921 sales—the lowest number since 2016. The drop happened despite homes in the state generally a bit cheaper (down 1.4 percent) than they had been the year before with a statewide median price of $335,100.
In the same year, there were a total of 89,005 active listings, up 35.6 percent from 2022. The properties spent an average 55 days on the market, 20 more than in 2022.
In eight metro areas in Texas, the median price of homes decreased, with the biggest drop (10.4 percent) in the Austin-Round Rock metropolitan statistical area or MSA. Despite the plunge in prices, the metro area still had the highest median price in Texas at $450,000.
In 17 metros analyzed by Texas REALTORS, home prices increased, though mostly modestly. The biggest climbs were in El Paso (7.6 percent) and McAllen-Edinburg-Mission (6.8 percent). Most other cities had less than a 5 percent change in median price, whether higher or lower.
But while the Texas housing market seems to be navigating troubled waters, Jef Conn, chairman of Texas REALTORS, said the situation is looking up this year, especially for homebuyers.
“While higher mortgage rates kept some buyers on the sidelines last year, that has led to a lot of pent-up demand,” Conn said in a press release accompanying the report. “Sales have picked up early this year, and this spring is shaping up to be an active market.”
Newsweek contacted Texas REALTORS for comment by email on Wednesday.
The price of homes in Texas skyrocketed during the COVID-19 pandemic years, when the U.S. housing market was booming amid relatively low mortgage rates, high demand and historically low inventory. While in some cities they’re still rising, although modestly, prices recently dropped in Texas thanks to the flooding of new listings on the market as the state has been building more new homes than almost any other in the country.
But it might take some time for homebuyers to take advantage of the lower prices. Many might still be discouraged from purchasing due to still-high mortgages, while others may struggle to face high property taxes and rising insurance premiums.
The cost of home insurance is rising in Texas due to the exacerbating risk of devastating extreme weather events posed by climate change, which experts say is posed to increase their frequency and severity. Texas homeowners paid on average $4,142 a year in 2023, $1,361 a year more than the national average, according to Insurance.com.
Property taxes remain high across the state despite a recent relief package passed by Governor Greg Abbott, with many residents telling Newsweek that they’re struggling to keep up with the cost.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
The price of condos listed for sale in Florida continue their slide, as the state faces a worsening insurance crisis and sellers struggle with high homeowner association (HOA) fees.
The housing market in the Sunshine State is currently in a difficult situation. On one side, skyrocketing insurance costs are pushing owners to sell their condos; on the other, rising costs are discouraging buyers.
According to the latest update by real estate platform Redfin, published in late February, sales of condos in Florida plummeted in January even as listings jumped and prices fell, proving how reluctant buyers are to invest in such properties.
While condo prices were up an average 8.4 percent year-on-year in the U.S. in January, some of Florida’s major metros saw a significant drop, with Miami reporting a 2.5 percent slump and Jacksonville a 6.5 percent decline, according to Redfin data. In Orlando, condo prices were down 4.8 percent year-on-year.
Newsweek contacted Redfin for comment by email early on Wednesday.
As of early on Wednesday, there were 44,623 condos listed for sale on Zillow in Florida, out of a total of 204,248 properties for sale in the state. Some 12,509 of these condos had a price reduction, a sign that sellers are willing to accept less than they think the property is worth if that means offloading it quickly.
The current crisis in Florida’s condo market is due in part to the rising costs of keeping a condo in the state, including higher HOA fees, as well as skyrocketing home insurance premiums.
Juan Castro, a Redfin Premier agent in Orlando, described condo costs as “shocking.” In a press release from the real estate platform, Castro said: “Condos that used to have a $400 monthly maintenance fee may now have a $700 fee. It’s causing buyers to rethink their plans.”
HOA fees in Florida have climbed because of new condo regulations imposed after the collapse of the 12-story Champlain Towers South condo building in Surfside on June 24, 2021. Some 98 people died in the tragic incident, which federal investigators found was due to construction flaws on the building’s pool deck.
HOAs are now required to regularly assess the safety of condo buildings and collect more money for maintenance and repairs if necessary. According to the website Florida Realty Marketplace, average HOA fees typically range between $100 and $350 in Florida, though this cost may vary depending on maintenance requirements and community amenities.
Meanwhile, the state appears nowhere near finding a way out of the insurance crisis that has been unfolding for the past few years. According to the Insurance Information Institute (Triple-I), Florida homeowners are paying the highest premiums in the country, an average of $6,000 in 2023.
The current crisis is due to a combination of factors, including excessive litigation costs, widespread fraud within the system, the higher risk associated with climate change and the exodus of several major private insurers from the state.
While the Florida legislature has passed some measures to fix the situation, including allowing six new insurers to write policies in the state this year, homeowners in the state are yet to feel a positive change.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.