Housing prices are on the rise even as buying rates have decreased.
Housing prices continue to rise even as buying has slowed due to various factors, including mortgage rate increases and a general shortage of new housing available.
For the first time in nearly three years, the average rate for a 30 year mortgage breached four percent, partly in response to the Fed’s interest hike but also due to the fact that low supply and steady demand have kept the average sale price of single-family homes increasing at a rate of 15.4% year after year. Many people blame investment groups that outbid individuals on housing prices, but in reality, fewer than two percent of rentals are owned by these groups. As mortgage rates continue to rise, we may begin the see some pullback on housing demand, and even though we have seen an increase in building projects by over five percent year over year, builders are having trouble keeping up with current demands.
This has also led to an increase in rent prices across the country, closing the gap between the mortgage to rent margin as tenants compete in a market with record low vacancy rates. In Florida alone, the top housing markets saw an increase in rent prices at a rate 1.5 times faster than respect home prices. These conditions reinforce the multifamily segment’s demand surge and as material costs rise and labor shortage increases, we may not see relief for quite some time yet as the number of existing homes available for purchase has declined for seven straight months. Fortunately, there has been an increase in permit activity which signals a rise in new housing availability.
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Article from Marcus & Millichap