“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