If you're trying to buy a new home and feeling the pinch, you're not alone. The U.S. housing market has achieved an unprecedented milestone, surging to a record valuation of $47 trillion, outpacing last year's high.
This impressive spike is driven by the scarcity of available homes on the market, triggering a surge in property values. An analysis of over 90 million residential properties supports this link between limited inventory and increased home prices.
In comparison to last year, the value of American homes has risen steadily, marking an impressive increase of nearly 20% over the last two years. Interestingly, the housing market has managed to counterbalance a $2.9 trillion devaluation experienced between June 2022 and February 2023 due to rising mortgage rates. In simple terms? Even though mortgage rates have gone up, housing prices remain high.
Homeowners who secured favorable mortgage rates during the pandemic are now hesitant to relocate due to the prospect of higher rates, resulting in a tighter supply of available homes. That means potential buyers are being pushed into fierce competition over a relatively limited pool of properties, preventing a significant decline in home values.
Almost all homeowners with mortgages - up to 90% - are currently benefiting from rates below 6%. This is contributing to a decreased rate of home sales. This has resulted in only 1% of homes in the country changing hands this year, the lowest figure in a decade. At the same time, the quantity of homes available for sale has hit a new low.
Within this rapidly changing landscape, the housing market has given us both winners and losers. Existing homeowners reap the rewards of low mortgage rates, leading to a growth in home equity, while prospective first-time buyers face obstacles due to elevated prices and limited options.
Overall, the latest report offers valuable insights into the reasons behind the record valuation of the U.S. housing market and the implications of these trends for both homeowners and home buyers. If you’re trying to buy a home, an experienced lender can be the key to securing the best available rate. Reach out to Texas United Mortgage today for more info!