“As interest rates rise coupled with rising sale prices many buyers are falling out of the market,” according to an agent in California. An agent in Washington state said rising interest rates are both motivating buyers and keeping some potential buyers from being able to purchase a home.
Analysts at CoreLogic said even with recent home price gains, affordability remains near record levels in many markets across the country. “For housing price affordability to return to the average level that we saw between 2000 and 2004, either home prices would have to rise an additional 47% or interest rates rise to 6.75% ,” the firm said.
Sam Khater, senior economist at CoreLogic, predicted that rising interest rates won’t deter a significant number of potential home buyers. “Given the very high home affordability levels and more supply on the market, CoreLogic remains optimistic that rising rates and home prices will not dissuade the more traditional buyer from entering the market and financing a home purchase,” he said.
After a strong spring home buying season, the growth rate of buyer traffic continued to decline in
June, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Traffic from current homeowners and first-time home buyers outpaced traffic from investors for the sixth consecutive month, according to home buyer traffic diffusion indexes. Some investors have started to reduce their home purchase activity and sell properties due to concerns about potential home price declines.
“It’s a seller’s paradise: abundance of buyers, shortage of listings,” according to an agent in Texas. “The property values are steadily rising and multiple offers occur frequently. I have investors who troll the listings for REOs and they are making offer s at a much less frequent pace. And the prices they are paying are closer to asking price, if not over asking price.
Current homeowners and first-time home buyers are focusing on non-distressed properties, with the market showing continued signs of strength. Average time on market for non-distressed properties was falling steeply in June, the average number of offers for non-distressed properties remained high, and sales-to-list price ratios on non-distressed properties were at elevated levels.
Nationwide, the average time on market for non-distressed properties was 8.6 weeks in June, based on the three-month moving average, down from 12.1 weeks in December. Western states had the lowest average time on market in June, led by California where non-distressed
properties averaged 4.5 weeks on the market before selling.
Nationally, non-distressed properties received an average of 2.3 offers in June, based on the three
month moving average. Average offers on non-distressed properties have steadily trended upwards since the fall of 2010 when they averaged 1.7 offers. And sales-to-list price ratios on non-distressed properties increased for six consecutive months, hitting 97.9% in June, based on the three-month moving average. In December 2012, sales-to-list price ratios for non-distressed properties were at 95.6%, based on the three-month moving average, closer to the baseline ratio of 95.0% seen from June 2010 through June 2012.
Source:Housing Trends Update July 2013