U.S. homeowners have lost $2.3 trillion since June, according to a new report from the real-estate brokerage Redfin. The total value of U.S. homes was $45.3 trillion at the end of 2022, down 4.9% from a record high of $47.7 trillion in June. That figure signifies the largest June-to-December percentage decline since 2008.
The report comes amid increased mortgage rates as the Fed tries to curb inflation. The 30-year fixed mortgage rate sat at 6.36% in December, about twice what it was at the start of 2022. Though rates fell in early February, they’ve since risen back to December levels to the dismay of buyers.
Consequently, Americans find themselves more reluctant to buy homes and prices have dropped. The median U.S. home sale price was $383,249 in January, which was up just 1.5% from the previous year, according to the report.
Redfin highlighted the Bay Area, noting that the region had seen the biggest drop in real-estate value compared to other parts of the country. For instance, the total value of San Francisco homes fell 6.7% in December, to $517.5 billion, a $37.3 billion decline year over year.
“Three of my listings recently went under contract after sitting on the market for more than a month,” said Ali Mafi, a Redfin real estate agent in San Francisco featured in the note. “They all had a few showings here and there in the fall, but no buyer wanted to pull the trigger. And then suddenly in the new year, we had 10 or 15 people touring each property.”
Meanwhile, the report pointed out, the Florida housing market has remained robust, with the largest increase in real-estate value compared to other parts of the country. The total value of homes in Miami rose 19.7% year over year ($77 billion) to $468.5 billion in December.
“Florida’s housing market is being sustained by folks moving in from the North and as of recently, the West Coast,” said Elena Fleck, Florida real estate agent featured in the report. “People are pouring in from New Jersey and New York, in large part because Florida has relatively affordable homes and no income tax. They can get a lot more bang for their buck here.”
The report noted that U.S. cities are doing much worse than U.S. suburbs. While the value of urban homes increased 2.5% to $10.8 trillion year over year, the value of suburban properties jumped 6.4% year over year, to $25.4 trillion, in December.
“The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom. The total value of U.S. homes remains roughly $13 trillion higher than it was in February 2020, the month before the coronavirus was declared a pandemic,” said Redfin Economics Research Lead Chen Zhao in the report.
“Unfortunately, a lot of people were left behind. Many Americans couldn’t afford to buy homes even when mortgage rates hit rock bottom in 2021, which means they missed out on a significant wealth building opportunity,” Zhao added.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
