Trying to buy a home? Good luck finding one right now.
Spring is usually the hottest period for new listings but real estate analyst Arthur Sterbcow told WWL new listings could be suppressed this year by economic anxiety and rising interest rates.
One of the biggest factors keeping new listings off the market right now is a lack of consumer confidence in where the economy is heading. Sterbcow said the buyer confidence ratio is the lowest it’s been in two decades.
“When people don’t feel secure, when they don’t have high degrees of confidence, they tend to stay out of the market,” said Sterbcow.
Consumers aren’t just fearing the future, they’re being squeezed in the present, and that’s keeping many homeowners from attempting to upgrade. As inflation continues to outpace wage growth homeowners have less room to afford a higher mortgage and decide to stay in place rather than move into a bigger, more expensive house.
Sterbcow said inflation isn’t the only factor at play. Rising interest rates have taken a bite out of buying power. Mortgage rates are up nearly 2% in the last year according to Sterbcow, and they’re expected to continue rising.
“For the same monthly payment last year you could’ve gotten a $250,000 mortgage, this year you can only get about a $200,000 mortgage,” said Sterbcow, who noted many homeowners refinanced last summer, and are now loath to take on a new mortgage at these higher rates.
Sterbcow warned housing stock is currently at near all-time lows, and with real estate prices expected to stabilize after seeing dramatic 10%, 15%, and even 20% gains since 2020, that’s unlikely to change in the near future.
Another impact of this historic housing crunch? Sterbcow said as first-time homebuyers get pushed out of the market, they have to keep renting, which drives up rent.
