After five years of carefully saving money for a down payment on their first home, Christine Rodriguez and her husband, Oscar, hoped to finally move out of their rented trailer in Des Moines, Iowa. The pandemic made their need more urgent. While five of their six kids were studying online from home, the […]
After five years of carefully saving money for a down payment on their first home, Christine Rodriguez and her husband, Oscar, hoped to finally move out of their rented trailer in Des Moines, Iowa.
The pandemic made their need more urgent. While five of their six kids were studying online from home, the three-room dwelling started to feel untenable.
The children, ages 6 through 17, couldn’t even freely play outside.
“When you live in a trailer, your neighbors are so close,” says Christine, a waitress at a sports bar. “We have a yard, but it’s not too much. We just wanted them to be able to go out and just be kids, like, you know, screaming and yelling and just having fun playing and not bothering other people because we’re so close.”
After contacting a real estate agent to look for starter homes in the $150,000 to $220,000 range, Rodriguez found about 25 listings that interested her. Ten were gone before she could make an appointment to view them, and the others were snapped up within hours of her visiting.
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“We don’t even have time to process or think, and they’re like, ‘OK, it just sold,'” she says, adding, “It doesn’t feel like there’s anything out there or, if there is, I feel like some of them are priced way too high and the sellers aren’t willing to come down at all.”
Rodriguez’s experience reflects a national trend. The number of homes sold nationally in the $100,000-$250,000 range fell by 11% in February from a year earlier, the National Association of Realtors told USA TODAY. In the less-than-$100,000 price range, the percentage of homes sold dropped by 26%. Homes sold for more than $1 million rose by 81%.
In the red-hot pandemic housing market, where prices have risen across the board, the ability to purchase homes seems proportional to the price range – the higher the price, the greater the sales. Growth has historically been similar across price tiers, but that has diverged during the pandemic.
Take Chappaqua, New York, which is 35 miles north of midtown Manhattan and a hamlet where Bill and Hillary Clinton live. Two years ago, homes priced at more than $2 million would sit on the market for a long time, says Usha Subramaniam, a real estate broker with Compass.
In 2019, two homes sold for more than $2 million. Last year, in the middle of the pandemic, that number jumped to 17. This year, 17 homes in that price range had sold or were in contract by April.
Wealthier Americans are buying up pricey, larger properties in places such as Chappaqua because they want houses with offices, gyms and other amenities while they and their families work and entertain themselves from home during the pandemic.
“They want move-in-ready homes,” Subramaniam says. “They want the big white kitchen. They want the big family room. They want a huge master bathroom. In other words, they want a classic grand house. If they’re going to leave the city, then they want to have it all here.”
Lower-priced homes, where sales have decreased, tell another story about the economy.
The decline in their sales is not due to a lack of demand, experts say, but rather a combination of low inventory and increasing prices caused by fierce competition. As a result, it’s harder for many Americans to buy their first homes, and that missed opportunity can widen the wealth gap, economists say.
“It is clear that homeownership is one of the most successful and biggest sources of wealth creation, particularly at the lower end of the income spectrum,” says Mark Fleming, chief economist for First American. “They don’t own a home, and therefore they cannot generate the wealth.”
U.S. home prices rose in February at the fastest pace in nearly 15 years as strong demand for housing, low mortgage rates and a national housing shortage gathered momentum.
The February S&P CoreLogic Case-Shiller U.S. national home price index, released Tuesday, rose 12% from a year earlier, the biggest gain since 2006.
“The housing boom will continue through 2021. … The run-up in house prices will erode affordability, particularly for first-time homebuyers,” says Abbey Omodunbi, a senior economist for PNC Financial Services.
Omodunbi notes that the passage of the First-Time Homebuyer Act, which would provide a tax credit for rookie buyers, should support demand from people looking for their first property.
Prices of the country’s most affordable homes rose 16.5% year over year in the first quarter, and luxury prices saw a similar gain (14.7%), according to an analysis by the Redfin real estate brokerage.
In January, the 30-year fixed mortgage rate, the most popular home loan product, sank to its lowest level on record, to 2.65%, according to mortgage finance company Freddie Mac. Mortgage rates set record lows more than a dozen times last year.
Although rates have ticked up, they remain near all-time lows, at 2.97% for the 30-year fixed mortgage. That’s down nearly 2 percentage points since November 2018, when rates stood at 4.94%.
“People are able to buy higher-priced homes because they have the purchasing power driven by low mortgage rates,” Fleming says.
First and foremost, I hope everyone enjoyed their 4/20. It’s such an awesome holiday, I just may have to do an article on how Congress can be lobbied to actually make it an official federal holiday (after federal prohibition ends, of course … any day now). For now though, the […]
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