Rising home prices are keeping prospective buyers out of homeownership — and some investors say it could be good for the rental market.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="High demand, low supply and low mortgage rates have driven up home prices to historic highs this summer. And for every $1,000 price increase, some 150,000 potential buyers are priced out of a home purchase — keeping them in the rental market. ” data-reactid=”17″>High demand, low supply and low mortgage rates have driven up home prices to historic highs this summer. And for every $1,000 price increase, some 150,000 potential buyers are priced out of a home purchase — keeping them in the rental market.
“Homeownership is still dead in this country because the only people that are buying homes right now are people that have equity, great credit and a job,” multi-family housing investor Grant Cardone told Yahoo Finance.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Home prices usually drop in the fall, but median home prices hovered near summer highs at $350,000 last week, up 12.9% for the week ending October 3 compared to the same time last year, according to Realtor.com.” data-reactid=”19″>Home prices usually drop in the fall, but median home prices hovered near summer highs at $350,000 last week, up 12.9% for the week ending October 3 compared to the same time last year, according to Realtor.com.
“If you keep pushing prices, you’re pricing people out. There’s no way around that,” said Ali Wolf, chief economist at Meyers Research, a California-based market data firm.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Meanwhile rent prices slid this summer, making apartments even more desirable and attainable for Americans during the pandemic. The national median rent price for a one-bedroom apartment was down 0.1% from last month to $1,231 according to Zumper, following a summer of stalled rent prices. ” data-reactid=”21″>Meanwhile rent prices slid this summer, making apartments even more desirable and attainable for Americans during the pandemic. The national median rent price for a one-bedroom apartment was down 0.1% from last month to $1,231 according to Zumper, following a summer of stalled rent prices.
“We’re going to become a renter nation in this country,” said Cardone. “Renting will become the economic choice and the desirable choice again…”
Red shoes from above on the white arrows,dilemmas concept buy or rent
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Americans — especially renters — have lower credit scores, higher rates of unemployment and less savings for a downpayment than they did at the beginning of the pandemic. Renters were more likely to fall behind on rent payments and more likely to lose their jobs during the pandemic, according to Nerdwallet, a California-based personal finance company.” data-reactid=”34″>Americans — especially renters — have lower credit scores, higher rates of unemployment and less savings for a downpayment than they did at the beginning of the pandemic. Renters were more likely to fall behind on rent payments and more likely to lose their jobs during the pandemic, according to Nerdwallet, a California-based personal finance company.
“There is an overlap in the people most likely to rent and those most likely to be hit by unemployment. For example, younger people and those working in hotel and food industries have both higher rental rates and are more likely to have lost their job during the pandemic,” said Elizabeth Renter, data analyst at Nerdwallet.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Meanwhile, lenders have increased requirements to slow homebuying demand as they scramble to distribute a record $3.9 trillion in loans this year, according to a Fannie Mae forecast. ” data-reactid=”36″>Meanwhile, lenders have increased requirements to slow homebuying demand as they scramble to distribute a record $3.9 trillion in loans this year, according to a Fannie Mae forecast.
“Homeownership is being driven by the upper class,” said Cardone. “You need a job that is secure, they’re [the banks] going to look at how you actually went through March, April, May and June with your job. If that was even slightly suspect, you’re not gonna get a home loan… You need a better credit score than you needed before COVID, and you need to secure a job.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter” data-reactid=”38″>Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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.
