Buyers Are Back

January 08, 2024

THE BIG SPLASH

Buyers are back

What you can’t miss today

A recent dip in mortgage rates has sparked a resurgence of buyer interest in the housing market, potentially kickstarting the spring market earlier than usual.

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  • Mortgage rates have fallen about a full percentage point from their October peak, fueling buyer optimism.

  • Fannie Mae's consumer survey shows a significant shift in homeowner expectations, with more believing rates will drop further.

  • The average rate on the 30-year fixed mortgage hit a low of 6.61% at the end of December, a welcome change from the 20-year high of around 8% in October 2023.

  • Real estate agents are reporting busier open houses and a return of buyers who had previously paused their searches.

  • Inventory remains tight, but there's hope for an increase in available homes as more positive mortgage rate outlooks may incentivize homeowners to sell.

  • The future of the housing market hinges on the interplay of interest rates, home prices, and economic data.

A SCOOP OF MARKET DATA

The number you should know

65%

Vermont emerged as the most popular state for movers in 2023, with 65% of inbound moves, as people sought family proximity and lifestyle changes, proving that the Green Mountain State is more than just maple syrup and ski slopes.

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  • United Van Lines' National Movers Study shows Vermont led the U.S. in inbound moves for the third consecutive year.

  • The primary reasons for moving to Vermont were to be closer to family (nearly 30%) and for lifestyle changes (about 20%).

  • Washington, D.C., and South Carolina followed closely, both with 63% inbound moves.

  • The trend indicates a shift towards less expensive metro areas with less competition in the housing market.

  • Rising rent costs and mortgage payments are driving this migration trend, with rent taking up 29.9% of median household income in November 2023, up from 26.7% in 2019.

  • Illinois, Michigan, California, North Dakota, and Kansas saw high percentages of outbound moves, while New Jersey topped the list for the most residents leaving.

A SCOOP OF INSIGHTS

Something you’ll learn

In the next decade, typical homes in several California cities, including San Diego, San Francisco, San Jose, and Los Angeles, are expected to be valued at over $1 million, making the Golden State's housing market even more golden for some.

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  • Zillow's analysis predicts that in 10 years, typical homes in these cities will surpass the $1 million mark.

  • San Francisco and San Jose already boast typical home values over $1 million.

  • In 10 years, San Jose's typical home value could reach around $1.5 million, followed by San Francisco at $1.19 million, and San Diego at $1.09 million.

  • Los Angeles is expected to see its typical home value rise to about $1.05 million.

  • The housing shortage is a key driver of these rising home values, with the U.S. estimated to be short of at least 2.3 million homes.

  • Despite rising mortgage rates, housing demand continues to outstrip supply, pushing home values to all-time highs.

  • To afford a million-dollar home, a buyer would need to earn at least $232,000, or $287,000 with additional costs.

A SCOOP OF CONTROVERSY

Everyone will talk about it

In San Antonio, Texas, the Elm Trails tiny-home community is turning heads with its mini mansions priced over $140,000, sparking debates about whether these compact abodes are worth their hefty price tags.

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  • Elm Trails, built by Florida-based Lennar, is selling tiny homes for over $140,000, with half of its 96 homes already sold.

  • The community has been a topic of satire and skepticism online, with some TikTok users mocking the buyers and others questioning the value.

  • A real estate agent's TikTok tour of a property priced at $136,900 described it as "the most affordable home in San Antonio."

  • Critics argue that the homes are overpriced, likening them to "Home Depot sheds."

  • The median listing price for a home in San Antonio is $300,000, but Elm Trails' price per square foot is higher than the city's average.

  • The average cost of a tiny home in the U.S. is around $50,000, making Elm Trails' prices seem steep.

  • Despite the controversy, Lennar's tiny-home venture is selling well, with plans to expand to other states.

How was today's shake?

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