The house market feels stuck right now. Many people want to buy homes, but two big problems make it hard. Banks ask for a lot of money in loan fees, and there aren't many houses to buy.
When you want to buy a house now, you have to pay very high rates to borrow money. This makes houses cost more each month. Right now, a normal house costs about $404,500. That's twice what it cost five years ago.
Young people trying to buy their first home have it really tough. Only 24 out of every 100 homes go to first-time buyers. This is the worst it's been in over 40 years.
Older people who own homes don't want to sell. They have 32 million houses, but they're staying put. This means fewer homes for others to buy.
Only eight places in the U.S. have more houses to pick from now. Most people who know about houses think things won't get better until 2025. But if you look hard, you might still find a good house to buy.
Current State of Housing Sales
The housing market is in a tough spot right now. Not many people are buying homes. Sales are down more than 3 out of 100 homes from last year.
It is hard to buy a home today. Home loans cost a lot of money. There aren't many homes to pick from. This makes it hard for people who want to buy and sell homes.
Not much is happening in the market. High loan costs and few homes to buy keep people from moving.
We may see things get better when home loans get cheaper. The money people who set loan costs may lower them soon. But buying and selling homes will still be hard in 2024.
Record Low Housing Market Turnover
People aren't moving homes as much as before. Right now, only 25 homes out of 1,000 get sold. This is the lowest number we've seen in 30 years.
Some cities see more home sales than others. In Phoenix, 38 homes out of 1,000 get new owners. But in Los Angeles, only 15 homes out of 1,000 get sold.
Many families want to stay in their homes because they've good deals on their house payments. They don't want higher payments on a new home. In Austin, half as many people are moving now compared to five years ago.
California is having a hard time. Seven of its cities have very few people buying and selling homes.
Small towns and areas outside big cities are doing a bit better, with more homes being sold there than in big cities.
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Mortgage Rate Impact on Buyers
Buying a home is harder now. Many people can't afford it because they've to pay more each month. The bank wants 6% to 7% more in fees to loan money. This stops many first-time buyers. Only 24 of every 100 buyers are getting their first home. This is the lowest since 1981.
Higher bank fees mean bigger monthly bills. People can't buy the homes they want.
Even when people make more money at work, home prices are too high right now. Not many people want to sell their homes. They want to keep their old, lower bank fees. This means fewer homes are for sale.
Housing Inventory Supply Challenges
Homes are hard to find right now. There are about 1.37 million homes for sale. This is more than last year but less than before COVID. Some parts of the country have more homes than others. The South has many more homes for sale now. The Northeast has fewer.
Eight states now have as many homes for sale as they did before COVID. These include Florida, Texas, and Arizona. Cities like San Diego and Tampa have seen big jumps in homes for sale.
It is still hard for buyers because there aren't enough homes. We need more new homes built. Low mortgage rates help some people sell their homes.
But we need more people to build or sell homes to fix this problem.
Baby Boomer Housing Market Effect
Many older folks want to stay in their homes as they get older. These people, called Baby Boomers, own more than 32 million homes.
When they keep their homes, it makes it hard for young families to find houses to buy. Right now, only a small number of these homes go up for sale each year. This means fewer homes are free for others to buy.
Even when older people pass away, their homes don't always go up for sale right away. This makes it tough for everyone who wants to buy a home.
Generational Wealth Lock-In
Many older people own homes they bought long ago. They like staying in these homes instead of moving to smaller ones. This means fewer houses are for sale.
These older folks have paid off their homes and saved a lot of money. But not everyone got the same chance. White families own homes worth much more than Black families do. This isn't fair.
When older people keep their big homes, young people can't find homes to buy. This makes it hard for young families to save money like their parents did.
More and more, only some people get to own homes while others rent.
Housing Supply Bottleneck
Many older people own homes in America. Right now, these Baby Boomers hold 4.4 million homes. Most want to keep their homes – more than half say they won't sell.
Even more, about 8 in 10, want to stay right where they are. This means fewer homes are for sale. Only about 250,000 homes from older owners hit the market each year. Some of these homes turn into rentals instead of homes for sale.
After 2032, more older people might move out. But for now, finding a home to buy is hard. High loan costs make people want to stay in their homes. Very few homes sit empty.
This means anyone looking to buy a home will have a tough time finding one. This problem won't get better any time soon.
Delayed Market Transitions
Many older homeowners feel stuck in their current homes. They want to move but can't. This creates problems for younger people who want to buy homes too.
Think of it like a long line of cars that can't move forward. The cars in front need to move first, but they're stuck.
The big reasons older folks stay put:
- Not enough homes for everyone
- Housing costs too much of their money
- Few cheap places made for seniors
- Doctor bills are too high
This problem is new and very big. While some older people will start moving in the next ten years, it will happen slowly.
Some older homeowners have saved more money than others. Black and brown seniors often have much less money in their homes than white seniors. This means not everyone can make the same choices about moving.
Price Forecast Adjustments and Trends
Home prices may change in different ways next year. At first, experts thought houses would cost much more.
Now, some think prices might stay the same or drop a tiny bit. Zillow says home costs won't grow at all.
But another group, CoreLogic, thinks homes will still cost a bit more. Both groups see that high loan costs and few homes for sale make it hard to know what'll happen.
Think of it like a puzzle where each piece tells us something new about home prices.
Market Forecasts Shift Downward
Home prices are taking a downturn. Zillow, a big real estate company, changed its guess about future home prices. They now think prices will drop by 0.1% instead of going up by 6.5%.
This is the third time they'd to lower their numbers. Why? Because it costs too much to get a home loan right now, and fewer people are buying homes.
Let's look at what's happening:
- Home prices are growing slower than before
- The normal home costs $359,892
- All parts of the U.S. show small price gains
- The cost of having a home keeps going up each month
The Fed might make it cheaper to get loans in 2025.
But for now, two big things keep home prices high:
- It costs a lot to get a home loan
- There aren't many homes for sale
These facts paint a clear picture: buying a home is tough right now, and it might stay that way for a while.
Experts Predict Gradual Growth
Home prices are getting better slowly, not fast like before. Some experts think prices will drop a tiny bit this year. Others say they might go up by 3% to 5%.
Right now, the normal home costs $404,500. That's more than last year.
Looking ahead, homes will likely cost a bit more next year too, but not as much as they did in the past few years.
Buying a home is still hard because loans cost a lot of money. There also aren't many homes for sale.
But if you want to buy a house, prices should stay steady and grow bit by bit.
New Construction Market Issues
Building new homes in America faces big problems that affect everyone looking for a place to live. Not enough new homes are being built. In fact, we need 3.8 million more homes than we've now.
Banks charge too much money to lend builders the cash they need. This makes it hard to start new projects. On top of that, builders can't keep up with all the people who want to buy homes.
The main problems are:
- Builders can't get cheap loans to build homes
- Far fewer homes are being built than in past years
- We need more homes for our growing number of people
- Building supplies and work cost too much money
These problems mean home sellers can ask for high prices. This makes it tough for regular people to buy the homes they want.
Federal Reserve Policy Implications
The Fed helps people buy homes by watching over how much it costs to borrow money. Think of the Fed as a big helper that makes sure banks play nice when lending money to families.
When you want to buy a house, you need to get a loan. The Fed doesn't pick the cost of your loan, but what they do makes loans cost more or less. Right now, loans cost more because the Fed made them go up to slow down how many homes people are buying.
The good news is that home loans may cost less next year. But they'll not be as cheap as they were a few years ago.
The Fed looks at how much things cost in stores and how many people have jobs. This helps them decide what to do next.
Remember: when the Fed makes changes, it affects how much you pay for your home loan. They try to keep things fair for everyone who wants to buy a house.
Affordability Crisis and Solutions
Housing costs too much these days. Many people can't buy or rent homes without spending most of their money. Houses now cost more than double what they did five years ago. A normal house costs $404,500.
Why is this happening? There aren't enough homes for everyone. We need 4.5 million more houses. Banks ask for high interest when people want to buy homes. Cities have rules that make it hard to build new houses. Many people who own homes don't want to sell because they like their low monthly payments.
But there's hope. Cities are changing their rules to let people build more homes. Workers built 1.45 million new homes last year.
The government is trying to help too. To fix this big problem, we need to keep building lots of homes and make new rules that help more people afford them.
Market Recovery Timeline Expectations
The housing market is slowly getting better. Experts think things will look much brighter by 2025. When banks start giving loans with lower rates, more people can buy homes.
Let's look at what's changing:
- Prices aren't going up right now
- There are more homes for sale than before
- Banks are starting to charge less for home loans
- People feel better about buying homes
Right now, we need many more homes in the U.S. – about 3.8 million more. But good news is coming. As loan costs drop and more houses get built, both buyers and sellers will have better chances.
Things might still be tough in 2024, but changes are coming that will help everyone.
Housing Market Changes:
- Today: High costs, few homes
- 2025: Lower costs, more homes
The numbers tell us prices will grow again in 2025. Banks will ask for less money on loans. More people will be able to buy the homes they want.
Conclusion
The housing market is stuck right now. People who want to buy homes face two big problems. First, they must pay very high rates to borrow money – almost 8% interest. Second, there are not many homes for sale. This makes it hard to find and buy a home. Things might get better when loan rates drop below 6% or when more people put their homes up for sale. Some builders are making new homes, which helps a bit. But it may take a year or more for the market to get back to normal.
