The housing market is starting to cool down, especially along the West Coast, as interest rates rise. That's forcing some sellers to adapt. Several Western markets are cooling faster, and San Jose, California, tops the list, according to a new Redfin analysis based on average sales prices, changes in inventory and other data on homes from February to May. “Low mortgage rates in recent years have boosted demand in many markets and caused some to overheat,” said Redfin's chief economist, Daryl Fairweather.
While 30-year fixed-rate mortgage interest rates were around 3% at the end of December, those rates rose to nearly 6% as the Federal Reserve raised its benchmark rate to combat rising inflation. The markets that cooled the fastest over the past year, according to Redfin, based on the average sales price, changes in inventory, price drops and other factors. Markets cooled more slowly over the past year, according to Redfin, based on the same factors. In fact, high-priced homes in areas such as Northern California have been hit the hardest, as 30-year mortgage rates approach 6%, according to Redfin's analysis.
As the market cools, sellers should no longer expect an open day to attract multiple competing offers or bidding wars between 20 and 30% above the sale price, Kowalczuk said. Those days are over. When you prepare to list a home for sale, hire an experienced real estate agent or broker who knows your neighborhood or region to help you determine the right selling price, he said. If your prices are too aggressive, it will be the kiss of death.
If a high starting price drives buyers away and the house languishes in the market, buyers who encounter the ad later may see that something is wrong with the property, Kowalczuk said. While today's market offers less leverage for sellers, you may still get a higher price than before the pandemic, Kowalczuk said. Do you have confidential informational advice? We want to hear from you. Get this in your inbox and learn more about our products and services.
According to ULI, trends in single-family housing up to 2030 will be shaped by a “latent cauldron” of demand for housing, limited by an inadequate supply of new developments and construction. In fact, single-family rentals are expected to become a central magnet for housing preference and could permanently alter the goal of owning a home. With just over 112,000 residents, Pueblo is the ninth largest city in Colorado and one of the largest steelmaking cities in the country. The city hosts the annual Colorado State Fair, is home to a vibrant arts scene and the Riverwalk along the Arkansas River, open year-round.
Home to just over 210,000 residents, Birmingham is the second most populous city in Alabama and is part of the state's largest metropolitan area. Although the city began as a steelmaking center, over the years the economy has become much more diverse. While steel continues to play an important role in the labor market, today Birmingham is also an important banking, financial services, biotechnology and health center of the South. For example, fast-growing metropolitan areas, such as Myrtle Beach, South Carolina, with a growth of 2.9%, and Lakeland, Florida, with a population growth rate of 1.6%, have a low price-rent ratio.
By contrast, some of the best markets for tenant demand have price-to-rent ratios of 20.0 or more. Jeff has more than 25 years of experience in all segments of the real estate industry, including investment, brokerage, residential, commercial and property management. While his real estate business is running on autopilot, he writes articles to help other investors grow and manage their real estate portfolios. Home prices have risen across the country, but some states have experienced particularly severe jumps.
But looking at an even longer period of time, home values have skyrocketed, according to an analysis of data from Zillow, which included the typical value of homes in the 35th to 65th percentile range. These are the states that have seen the most dramatic increases in home values in the past two decades. With high demand for homes and relatively low inventory, the District has seen home prices soar as potential buyers crowd to buy homes. More recently, March prices for single-family homes in O'ahu, a popular tourist destination, hit a new record, a problem that the Honolulu Board of Realtors attributed to supply and demand.
Robert Spendlove, senior economist at Zions Bank, told KTVB 7, a Boise news outlet, that Idaho's real estate market has been leading the country for several years, but prices could be close to their peak. It has been ranked as one of the most popular real estate markets in the country, according to The Washington Post. While home values have risen, it's still lower than those seen in many of the other states with the most significant price jumps, Zillow data shows. It's not particularly surprising that the Golden State is on the list, as California cities such as San Jose, Los Angeles, San Francisco and San Diego conducted a city-by-city analysis of average home sales prices.