Home prices have registered their biggest annual decline in over 10 years, according to real estate brokerage Redfin, with price drops led by “pandemic boomtowns and pricey Bay Area markets.”
Boise Redfin real estate agent Shauna Pendleton points out that she was “consistently busy” during the fall. However, “things got really quiet” in March following the collapse of the Silicon Valley Bank.
“That killed the buyer momentum that had been building and brought us right back to where we were last year when mortgage rates shot up. There’s this fear that everything will crash.
Declining Mortgage Applications, Affordability Concerns
Mortgage applications are also decreasing. According to the Mortgage Bankers Association (MBA), mortgage loan application volume fell 8.8 percent on a seasonally adjusted basis for the week ending April 14 from a week earlier.“The 30-year fixed rate increased 13 basis points to 6.43 percent, which led to purchase applications declining 10 percent. ... Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act.”
Low Inventory, Baby Boomers Buying Homes
The pool of sellers who are willing to sell their homes is tightening. Elevated mortgage rates are prompting sellers to stay put. Many homeowners are hesitant to sell in the current market as this would mean they may have to pay a higher mortgage rate for a new home.“One of my sellers recently got multiple offers on their home, but pulled the listing off the market when they found out their interest rate was going to double,” said Jennifer Bowers, a Redfin real estate agent in Nashville.
“There are a lot of homeowners who don’t want to give up their 2.5 percent or 3 percent rate for a 6.5 percent rate. Both buyers and sellers are having a tough time adjusting because rates are swinging up and down so quickly.”
Meanwhile, according to a new study by the National Association of Realtors (NAR), baby boomers—people aged 58 to 76—were the largest home buyers in 2022. Baby boomers accounted for 39 percent of home buying last year, up from 29 percent in 2021. In contrast, the millennial share fell to 28 percent from 43 percent.
“These homeowners have a lot of housing equity, and they made substantial gains over the last two years as home prices continue to rise,” she said. “Some of them are now able to pay cash for a new home after selling their house.”