ATTOM Data Solutions Report and Rising Interest Rates Paint a Grim Picture for Homebuyers
Housing affordability remains a significant issue across the United States, as indicated by ATTOM Data Solution’s Q3 2023 US Home Affordability Report. The report reveals that median prices for single-family homes and condo units in the third quarter were less affordable than historical averages in 99% of counties across the country.
Adding to the affordability crisis, interest rates are currently around 8%, causing ‘major home expenses’ to consume 35% of the average national income. This percentage significantly exceeds the 28% affordability benchmark commonly used by industry lenders and marks the highest level since 2007.
Interest rates have been on an upward trajectory for seven consecutive weeks, reaching 7.9% for a 30-year fixed interest loan. This rate is the highest since September 2000. As a result, new mortgage applications have plummeted to a 28-year low, according to the Mortgage Bankers Association.
The Federal Reserve is scheduled to convene on November 1 to discuss interest rate policies. The expectation is that the rates will remain unchanged. Matt Vance, the senior director and Americas head of multifamily research at CBRE, stated that additional Federal Reserve rate hikes are unlikely this year. He anticipates a rate cut probably around the second quarter of next year.
The real estate market has notably slowed due to the increasing burden of interest rates. A recent report from the Huntsville Area Association of Realtors (HAAR) for the week ending October 14, 2023, provides insights into the local market’s response. The report shows a 2.1% decline in new listings of single-family units in the Huntsville/Madison County area for that week, along with a 17.7% drop in pending sales. Condo unit listings, however, increased by 66.7%, although they make up a small portion of the market.
In legal news, a Federal class-action antitrust lawsuit, Moehrl Vs National Realtors Association, is currently being argued in Illinois. The case could potentially change the rules surrounding broker compensation in real estate transactions. It’s a development worth monitoring for future implications.
While some may consider bypassing real estate agents to save money, the complexities involved in real estate transactions often make the services of a certified and ethical agent invaluable.
The Huntsville Business Journal continues to monitor and report on both local and national real estate market developments. The journal strongly advises readers to consult certified, professional realtors for buying or selling real estate. The National Association of Realtors mandates its members to adhere to professional standards and a code of ethics, requiring them to take ethics courses every three years.