SANTA CLARA, Calif.,
Jan. 19, 2017 /PRNewswire/ -- New
data from realtor.com®, a leading online real estate destination
operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV]
subsidiary Move, Inc., suggests that the share of first-time buyers
planning to buy in spring 2017 fell sharply when mortgage rates
began to rise at the end of last year, dropping by as much as 10
percent since last October. At the same time, record low inventory
levels, higher prices and heavy buyer competition is creating more
urgency for active home buyers.
"Last fall, we saw a large jump in the number of first timers
planning home purchases, which was very encouraging because their
market share is still well below pre-recession levels," said
Jonathan Smoke, chief economist for
realtor.com®. "But, as evidenced by their decline in share,
first-time buyers are really dependent on financing and
affordability is one of their largest barriers to home ownership.
This number could continue to decline with anticipated increases in
interest rates and home prices."
According to realtor.com®'s January survey of active home
buyers, 44 percent of buyers planning to buy in spring 2017 are
first-time home buyers. This has dropped significantly since the
survey was conducted in October, when 55 percent of buyers of
planning a spring purchase indicated they were looking for their
first home.
The average 30-year conforming rate rose to more than 4.2
percent by the end of December 2016
from 3.4 percent at the end of September
2016. With average rates today about half a percentage point
higher than they were in 2016, a median-priced home financed with
20 percent down would cost an additional $720 per year in added interest. That
equals more than 1 percent of the median household's income.
Survey data collected by realtor.com® found that first-time
buyers were nearly five times more likely than repeat buyers to say
they faced challenges qualifying for a mortgage, with affordability
ranking highly among first-time buyer concerns. First-time buyers
comprised 32 percent of all buyers in November, according to the
National Association of Realtors®.
"The rise in rates is associated with an anticipation of
stronger economic and wage growth, both of which favor buyers,"
added Smoke. "At the same time, higher rates make qualifying for a
mortgage and finding affordable inventory more challenging. The
decline in the share of first-time buyers since October suggests
that the move up in rates is discouraging new home buyers
already."
To date, rising interest rates appear to be having the opposite
impact on repeat home buyers. Even with the current increases,
interest rates remain historically low, and the movement in rates
hasn't yet tipped overall buyer demand down. It has actually
sparked demand from experienced buyers trying to close before rates
increase further, as evidenced by increased realtor.com® listings
views and decreased inventory. In the short term, the rate movement
seems to have encouraged rather than dampened overall demand.
In addition to likely additional mortgage rate increases,
prospective buyers should be aware of the following aspects of the
housing market realtor.com® expects to see at play over the coming
year.
Other Significant Challenges for Home Buyers in 2017
- There Aren't Enough Homes for Sale.
Even
after 51 straight months of a below-normal supply of homes for
sale, 2017 is expected to be even more challenging. Active
inventory in December on realtor.com® was down 11 percent compared
to December 2015. As a result, the
year has started with the lowest inventory of homes for sale at
least since the recession, and possibly in decades. Inventory was a
challenge all year but a stronger offseason in the fall depleted
the available homes for sale even more than is typical.
- Prices Remain at Record Highs.
Asking
prices usually decrease in the fall, but this year the median list
price in December, was the same as in July at $250,000. That represents a record price for
December and a year over year gain of 9 percent, the highest
monthly year-over-year gain in 2016.
- Rising Rates Have Made Demand Even More
Intense.
With fewer homes on the market, average
listing views were up 40 to 80 percent in the last three weeks of
December, compared to the same time in 2015. Multiple potential
buyers seem to be interested in virtually every home on the market
even though we are in the slowest time of the year for sales.
Forward-Looking Statements
This document contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's views and
assumptions regarding future events and business performance as of
the time the statements are made. Actual results may differ
materially from these expectations due to changes in global
economic, business, competitive market and regulatory and other
factors. More detailed information about these and other factors
that could affect future results is contained in News Corp's
filings with the Securities and Exchange Commission. The
"forward-looking statements" included in this document are made
only as of the date of this document and we do not have any
obligation to publicly update any "forward-looking statements" to
reflect subsequent events or circumstances, except as required by
law.
About realtor.com®
Realtor.com® is the trusted
resource for home buyers, sellers and dreamers, offering the most
comprehensive source of for-sale properties, among competing
national sites, and the information, tools and professional
expertise to help people move confidently through every step of
their home journey. It pioneered the world of digital real estate
20 years ago, and today helps make all things home simple,
efficient and enjoyable. Realtor.com® is operated by News Corp
[NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. under a
perpetual license from the National Association of REALTORS®. For
more information, visit realtor.com®.
Media Contact:
Realtor.com®
Lexie Puckett Holbert –
lexie.puckett@move.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/among-top-home-buyer-challenges-for-2017-rising-mortgage-rates-are-dampening-first-time-buyer-plans-for-spring-300393387.html
SOURCE realtor.com