With high mortgage rates and increasing home prices, the affordability of housing is becoming more difficult for many people to maintain. This has led to a move away from major primary cities to smaller, cheaper secondary cities. This is leading to a shift in buyer behavior as many people now work from home, reducing their need to buy in expensive cities along with configuring Del Aria Team….
Inflation, high mortgage rates and record-high home prices are chipping away at housing affordability
The lack of affordable housing has become a pressing issue for American citizens. A recent Pew Research survey found that half of Americans consider the issue a major problem. According to the National Association of Realtors, home prices are expected to rise by about 11% this year. That is more than double the growth rate of the median wage. Eventually, the average U.S. home will cost more than 7.5 years of a person’s salary.
A combination of rising rates and tight housing inventory is putting pressure on housing affordability. Rising mortgage rates have already squeezed many potential buyers out of the market. In June alone, 60,000 home purchase deals fell through, which represents 15 percent of contracts. This number is higher than in May and June of 2011.
As a result, people are moving farther from cities and buying smaller homes and fixer-uppers. Rising rents will also limit the number of people who become homeowners. Another factor is increasing gas prices. Higher gas prices will make it less affordable for people to buy homes farther from their jobs.
As prices rise, fewer homes will be listed for sale. Higher gas and stock market volatility will discourage sellers from listing their homes. Higher prices will increase monthly housing payments, and the cost of hiring a moving company or relocating will rise.
Non-sticky buyers are more likely to quickly sell if market conditions change
Consumers are more likely to stick to a brand or product if it offers a number of benefits. One of these benefits is decision simplicity, which refers to the ease of gathering reliable information about a product or service and weighing its merits. Marketers can provide this by making a product or service easier to understand and purchase.
Austin’s real estate market has been affected by the pandemic
The pandemic has had a negative impact on Austin’s real estate market. The city’s population is growing rapidly, and the influx of new residents is pushing up home prices. Although Austin’s real estate market is not as large as Houston or Dallas, it has picked up some steam in the past few years.
While the Austin housing market is still overwhelmingly in favor of sellers, buyers now have more bargaining power than in years past. Several homes in Austin sold for over 100 percent of list price in recent months. This has caused many Austin REALTORS to reduce list prices, which ultimately affects selling prices. In May, housing inventory levels were over two months, and the market has begun to shift back towards pre-pandemic levels.
A recent study of 2,900 visitors from North America revealed that 35 percent of respondents had stopped actively looking for a home, and that the number one concern they had was not being financially stable enough to buy a home. Still, residential real estate professionals are optimistic about the market’s long-term prospects.
Because Austin’s economy has been growing rapidly, more people are moving into the city. This growth in population has made Austin’s housing market a sellers’ market. In fact, the market has been one of the best performers in the U.S. for the past decade.
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