Home Affordability Has ‘Collapsed’ in 2022. What To Expect Next, According to BofA

Is a housing crash brewing? Not likely, says BofA

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The double whammy of surging mortgage rates and skyrocketing home prices has led to “collapsed” housing affordability in America, according to Chris Flanagan’s team at BofA Global Research.

The situation has gotten so bad that it now compares to the “historically low affordability readings” in the fourth quarter of 1987 and the first quarter of 2005, according to the BofA team.

Notably, those years coincide with the “Black Monday” stock market crash of 1987, when the Dow Jones Industrial Average tumbled about 22.6% in a single trading session, and the start of the subprime mortgage crisis as home prices roared higher from 2000 to 2005, and hit a multiyear high in 2006.

Existing home sales tumbled 33% in the wake of the 1987 crash and 45% in the aftermath of the subprime mortgage debacle. “In this cycle, we think a 35% peak-to-trough existing-home-sales decline is plausible,” Flanagan’s team wrote, in a weekly client note.

After home prices shot up a record 20.6% annually in March they probably “are at or near the peaks for this cycle,” the team wrote, considering that a chunk of the appreciation likely stems from historically low mortgage rates that have since vanished.

The cost of a 30-year fixed mortgage nearly doubled to about 5.25% in May from 2.75% last winter. The move higher came as the Federal Reserve began fleshing out plans to raise interest rates and trim its nearly $9 trillion balance sheet in a bid to tackle inflation that recently hit a near 40-year high.

While home prices have continued to climb this year, household wealth tied up in stocks and bonds has suffered, with the S&P 500 index off 14% from its Jan. 3 closing high through Monday and the Nasdaq Composite Index nearly 24% below its peak, according to FactSet data.

However, even in a somewhat “draconian” scenario, where the “supply side for housing is meaningfully altered by reduced affordability, the supply side remains exceptionally supportive” for home price appreciation, Flanagan’s team wrote.

Why? Blame the subprime mortgage mess and decades of underbuilding. Those catalysts led to record low supply of existing homes (see chart), which will take time to “normalize.”

Home supply was tight before the pandemic made it worse, as many families looked for bigger houses outside of big cities to adapt to remote work. That remains a key factor in BofA’s forecast for home prices to climb 15% for 2022 and 5% for 2023.

“Shelter is still scarce and residential real estate is still a good inflation hedge: To the extent there is any distress in housing, and forced sellers emerge, we think owner-occupied or non-owner-occupied buyers will be there to at least partially absorb the sales,” they said.

The post Home Affordability Has ‘Collapsed’ in 2022. What To Expect Next, According to BofA appeared first on Real Estate News & Insights | realtor.com®.

So Long, Aspen! 10 Cities Where Outdoor Lovers Can Actually Afford To Buy a Home, 2022

10 Cities Where Outdoor Lovers Can Actually Afford to Buy a Home, 2022

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COVID-19 sparked seismic shifts in how Americans live, and one change that’s still going strong today is the itch to ditch those languishing gym memberships and hop on a bike, go on a hike, or otherwise embrace the great outdoors. For real.

A record-high number of individuals (53%) participated in outdoor recreational activities in 2021 largely due to necessity, according to a recent Outdoor Industry Association survey. Not only do open-air spaces sport lower COVID-19 transmission rates, but they also carry psychological benefits many realized they needed dearly. Let’s face it, strolling beneath real trees is far more Zen than staring at virtual greenery (or frantic studio cycling instructors) on a Peloton screen—no contest.

It was only a matter of time before this new wave of outdoor enthusiasts started dreaming of settling down in more natural surroundings 24/7. So the data team at Realtor.com® found places where homebuyers could enjoy the great outdoors, only on a budget—areas that offer reasonable home prices and an abundance of activities beyond the front door.

“During the pandemic, we saw a shift in migration trends from urban cores to areas with [smaller populations and more] outdoor amenities,” says Frank Nothaft, chief economist at real estate data firm CoreLogic. “Mountain regions and smaller coastal metros were in particularly large demand.”

The problem, of course, is that many of our country’s most exalted outdoor meccas (think Boulder or Aspen in Colorado) sport insurmountable home prices, particularly in today’s hypercompetitive market. Still, it’s a big country—and it turns out, there are plenty of more affordable options, especially in the Rust Belt and Midwest.

To find the most affordable outdoorsy places, the Realtor.com data team cross-referenced April median listing prices in cities and counties with the nation’s 500 largest metropolitan areas. We then factored in bike-friendliness ratings from the League of American Bicyclists, plus the number of outdoors-related businesses per household in each metropolitan area from the U.S. Census Bureau. From there, we narrowed our rankings to places within a four-hour drive of a national park, and picked just one metro per state to ensure geographic diversity. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)

The results prove it’s entirely possible for mere mortals with regular-sized paychecks to purchase property in an outdoor paradise—they just have to meander a bit off the beaten track.

Ready to inhale some fresh air? Here’s a glimpse of where homes are hiding today that offer serenity now, only without soul-crushing costs.

10 Cities Where Outdoor Lovers Can Actually Afford To Buy a Home in 2022

Realtor.com

1. Urbana, IL

A home for sale in Urbana, IL

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Median home list price: $165,000

Urbana began its push to preserve and protect its green spaces way back in the early 1880s, and these early, pioneering efforts clearly paid off. The city’s diverse collection of rare and unusual vegetation has earned it bragging rights as the first Illinois county to earn a Tree City USA designation applauding efforts to preserve the local canopy. Plus, this magnificent foliage can all be enjoyed via 26 miles of hiking/biking trails and 1,077 acres of city parks, including the state’s only “dark sky” campground where stargazers can take in breathtaking views of the cosmos above.

Meanwhile, the University of Illinois at Urbana-Champaign’s Chambana Welcome Crew warmly introduces newbies to the many outdoor activities and events the city has to offer.

“With the presence of the University of Illinois, our community offers amazing diversity with outstanding outdoor cultural experiences like the Japan House and Krannert Center for the Performing Arts outdoor amphitheater,” says PJ Trautman, real estate agent and broker with Champaign County Realty. The scene is particularly hopping in the spring and summer months, “when residents can enjoy the outdoor farmers market, festivals, parks, and trails.”

Outside of city limits, numerous big cities are within driving distance for the occasional day at the office or night out.

“Urbana is a very accessible town with travel times of less than three hours to cities like Chicago, Indianapolis,  and St. Louis,” Trautman says.

And this lush landscape has plenty of affordable homes, including this three-bed, 2.5-bath house that sits on just over 1 acre of wooded land in northeast Urbana listed for $257,900.

2. Madison, WI

Madison, WI

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Median home list price: $410,000

Residents call Madison the “unofficial bike capital of the Midwest,” claiming their city boasts more bikes than cars. Indeed, cyclists galore glide along Capital City State Trail, a seven-mile stretch that meanders near the shores of Lake Monona as well as urban landmarks, including the city Convention Center, designed by Frank Lloyd Wright.

Beyond that lie 200 additional miles of biking and hiking trails, plus (for nonbikers) fishing, kayaking, and other water sports at the Lower Yahara River Trail. And come winter, rather than shut down, this city comes alive with snowshoeing, skiing, and skating on one of five local lakes.

“Madison is super outdoorsy and a biker’s paradise,” says Bob Winding, a local real estate agent who grew up in Madison and lived in New York City and Minneapolis for a number of years before moving back to Madison in 2005. He’s noticed a growing number of his clients are from out of state.

“We are seeing more people coming in from the coast,” he says, adding that the locals help newcomers feel at home in no time.

As he can attest from personal experience, “The big difference with Madison is that you can be an outsider, meet somebody at a tailgate that afternoon, and that night you can be at their house for dinner.”

3. Iowa City, IA

Iowa City, IA

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Median home list price: $320,000

Iowa became a leader in the state park movement after establishing its first in 1920. By1930, the Hawkeye State boasted 83 parks, more than any other in America.

A network of dedicated riverside trails wending through 1,800 acres of parks and natural areas offer plenty of opportunities for great cycling—Iowa City has been dubbed a “Bicycle Friendly Community” by the League of American Bicyclists. Meanwhile, hikers have dubbed the Devonian Fossil Gorge one of the most fascinating sites in the area due to its 375 million-year-old ocean floor that’s chockablock full of fossils.

For a more scholarly (yet still active) pursuit, residents can perambulate the Iowa Avenue Literary Walk—a roughly 1-mile stroll where one can peruse plaques highlighting the homes of famous writers, including Flannery O’Connor, Kurt Vonnegut, and Tennessee Williams. Famed for its Iowa Writers’ Workshop, the city was also the first in the U.S. to be named a UNESCO City of Literature.

In addition to its literary clout, the University of Iowa also means the local median age is a mere 26, which helps keep housing affordable, the downtown walkable, and the local culture vibrant and young. We think playwright Williams would approve, given he got his start in this town and once wrote in a postcard to his mother, “I am a waiter. … I get meals for three hours service … hope I can keep it.”

4. Bloomington, IN

A home for sale in Bloomington, IN

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Median home list price: $375,000

Located southwest of Indianapolis, Bloomington is home to Indiana University and 10 city parks. About two hours away are two state forests, including Brown County State Park, nicknamed “Little Smokies” for its resemblance to the Great Smoky Mountains. Within the park’s 16,000 acres, residents enjoy camping, kayaking, horseback riding, fishing, and more. It’s also considered prime “leaf peeping” territory where people can watch the fall foliage erupt in a rainbow of color.

Bloomington also happens to be a short drive to nearby Lake Monroe and Hoosier National Forest—where, thanks to average temperatures above freezing, Bloomingtonians can enjoy the great outdoors year-round. Bloomington claims to have the best pizza in the Midwest and an outstanding arts and culture scene with a 60-block district of galleries, theaters, music venues, and restaurants that are gaining a reputation among foodies and craft brewery fans. And one of America’s premier bike races, Indiana University’s Little 500—immortalized in the classic film “Breaking Away”—is the centerpiece of a whole host of outdoor activities each April.

Housing is also still affordable here, with plenty of single-family homes for sale well below typical prices. This stone-facade, 3,000-square-foot house with three bedrooms and two baths on a 2-acre lot, for instance, will set homebuyers back $274,900.

5. El Paso, TX

Southern Rocky Mountains in El Paso, TX

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Median home list price: $280,000

In the far western reaches of Texas remains one of the Lone Star State’s wildest cities.

El Paso sits at the junction of where New Mexico, Texas, and Mexico meet, with access to stunningly beautiful deserts and mountains in the Southwest. Located less than three hours from three national parks—White Sands, the Guadalupe Mountains, and Carlsbad Caverns—El Paso is a go-to for mountain biking, rock climbing, off-roading, and caving for those who crave some eerie underground scenery.

El Paso is also home to part of the massive 24,000-acre Franklin Mountain State Park, which stretches from central El Paso all the way to New Mexico. The weather here couldn’t be better if you love having fun in the sun.

“We have almost 300 days of sunshine every year,” says Shawn Jolley, a real estate agent with Pindrop Realty. “You can basically do outdoor activities year-round.”

To top it off, a new Amazon distribution center was recently built here that put this town on the map and is drawing in people from more expensive coastal areas.

“I represent a lot of buyers from California, Oregon, and Washington that are moving out this way,” Jolley says. “It has driven up the local market for us. Since COVID, prices are up 30%. [But] the out-of-towners love the price because it’s still 20% below the national average. It’s super affordable compared to the markets that they come from. You can get a lot of house for your money here.”

Case in point: this four-bed, 2.5-bath home listed at $275,000, which sits on a quarter of an acre near the Texas and New Mexico border and is a short 20-minute drive to nearby Franklin Mountains State Park.

6. Columbia, MO

Architectural columns and flowers on the campus of the University of Missouri

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Median home list price: $349,000

Although the Netflix hit “Ozark” was shot in studio-friendly Atlanta, the actual Lake of the Ozarks is located in Missouri—an hour-and-change drive from Columbia, MO.

“Ozark” cachet aside, Columbia is within driving distance of five state parks as well as St. Louis and Kansas City, making it an ideal community for those looking for proximity to a major urban area. It’s also home to a total of three colleges (the University of Missouri, Stephens College, and Columbia College) whose students can get by living car-free thanks to the city’s plentiful biking trails.

“We’ve got a huge trail network that extends through the whole city that connects a lot of the parts together,” says Matt Schuchard, real estate agent and broker with Century 21 Access. “We also have the MKT Trail that runs through Columbia, which is an old railroad line.”

Schuchard has noticed that the pandemic has brought a lot of newcomers to the area.

“There’s a lot of people moving from bigger cities on the East and West Coast for sure,” he says. Back home, “They’re selling their house for $700,000 to $800,000, and they can come here and buy something for half of that and have 5 acres.”

For instance, for $329,000, homebuyers can enjoy a four-bedroom, 3.5-bath, 2,538-square-foot house on 2 acres overlooking a pond that’s a short five-minute drive to the MKT Trail.

People might come for the wide-open spaces, but they fall in love with Columbia’s small-town vibe, too.

“It’s that Midwest, mid-America hometown feel,” Schuchard says.

7. State College, PA

A home for sale in State College, PA

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Median home list price: $340,000

State College is not the name of an educational institution; it’s the town surrounding Penn State University. And yes, while Nittany Lion pride is strong here, this is hardly the only fun this area has to offer.

Outdoor activities abound, from mountain biking on the more than 100 miles of forested trails in nearby Rothrock State Forest to fly-fishing in one of 19 trout streams. In fact, it’s not unusual for local residents to leave work early (or roll in late) when the fish are biting.

Meanwhile, residents can escape the summer heat within the cool caverns of Penns Cave and Wildlife Park. In the fall, farmers markets and tailgating parties around UPenn campus are a way of life, while the winter season brings cross-country skiing at Black Moshannon State Park.

The town buzzes with an energy that attracts a younger crowd, thanks in part to the low cost of living. For $329,000, homebuyers can snag this three-bedroom, two-bath beauty on a 5,663-square-foot lot, complete with a brick fireplace for cozying up after a day out.

8. Morgantown, WV

Morgantown, WV

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Median home list price: $300,000

Fun fact: West Virginia is the country’s most mountainous state. That certainly explains how local West Virginia University’s mascot was named The Mountaineer, but it also explains how Morgantown made it on the list of most affordable outdoorsy cities.

Beyond the Mountaineer football games (which are huge for area residents), Morgantown is known for its views, sitting pretty along the Monongahela River near the Appalachian foothills, surrounded by valleys and lakes.

Meanwhile, the town’s old railways have been repurposed and turned into more than 50 miles of trails for hiking and biking. Nearby, rock climbing can be had on sandstone cliffs, while come winter these snow-capped peaks morph into a skiers’ paradise at places ranging from Seven Springs to Blue Moon Rising on Deep Creek Lake.

And talk about easy living: This three-bedroom, two-bath home is only $90,000, leaving you with plenty of cash left over to buy an ATV and more.

9. Rochester, NY

A home for sale in Rochester, NY

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Median home list price: $200,000

Located on the Great Lake of Ontario, an hour’s drive from a smattering of pristine Finger Lakes plus the honeymoon-worthy Niagara Falls, Rochester is a water lover’s paradise. Sailing and fishing dominate the warmer months, while skiing and sledding ensue once the temperatures dip.

It’s also home to former corporate giants Kodak and Xerox, which means this city sports many grand old homes and commercial buildings dating back a century or more. Nonetheless, it’s still considered one of the most affordable cities in the country. For $187,000, homebuyers can grab this three-bedroom, 1.5-bath with a swimming pool that’s within walking distance of Helmer Nature Center.

10. Duluth, MN

Duluth, MN

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Median home list price: $265,000

Not too long ago, Duluth was declared the “Best Town in America” by Outside Magazine. Why? The city’s thriving food scene, walkable neighborhoods, and incredible access to trails, rivers, mountains, and lakes.

Duluth stretches along the westernmost tip of Lake Superior and boasts nearly 7,000 acres of city-owned parklands, 178 miles of wooded trails, and 16 trout streams, in addition to the lush natural spaces surrounding the city.

The city has grown in popularity among outdoor enthusiasts who are taking full advantage of the biking, hiking, and paddling that abound in the area in places like Chester Park and Ely’s Peak.

“If you like to hike, it doesn’t matter where you are in town—within five minutes you can be on a trail,” says Trish Kroening, a real estate agent with Re/Max Results. “If you’re a nature enthusiast, that shoreline just sucks you in.”

As for the colder season, “The city’s Lakewalk is plowed all winter long, so there are people that ride their fat-tire bikes to work downtown [year-round],” Kroening says.

Homebuyers will be pleasantly surprised by the inventory of single-family homes in the area, including this $149,300, three-bed, one-bath, 1,289-square-foot house that’s conveniently located near Wheeler Field for baseball and the Lincoln Park Craft District.

“That’s where COVID-19 was actually a blessing for our city,” says Kroening. “Because what happens when people realized they don’t need a brick-and-mortar building to operate? So if you’re getting paid $500,000 a year, why wouldn’t you buy a lake home at a reasonable price and do your work down there?”

The post So Long, Aspen! 10 Cities Where Outdoor Lovers Can Actually Afford To Buy a Home, 2022 appeared first on Real Estate News & Insights | realtor.com®.

Texas Farmhouse With Iconic Horseshoe Gate Is the Week’s Most Popular Home

most popular homes

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A Texas farmhouse with an iconic horseshoe gate in the tiny town of Elmendorf is the week’s most popular home on Realtor.com®.

Once you pass through the notable gate, potential awaits. The 137-acre lot features everything from a chapel and horse racetrack to an 1800s replica saloon and jailhouse.

Another reason this place drew plenty of clicks this week? The 4,300-square-foot main house is a time capsule with wood paneling, bold carpet choices, and other decor touches from decades past. It will require updates, but the property also offers the potential for commercial development as a recreational venue or event center.

You also clicked on a Pennsylvania home built by a Union Army general, a Vermont cottage that evokes the English countryside, and a gargantuan resort-style home near Dallas.

For a full look at the week’s 10 most popular homes, simply scroll on down.

10. 4 SW Confederate Ave, Gettysburg, PA

Price: $825,000
Why it’s here:
Despite its street address, the Shultz House was built in 1837 by a Union Army general and borders Gettysburg National Battlefield.

The spacious six-bedroom Victorian will take you back in time with its custom murals, wide-plank flooring, stained-glass windows, and original brass and crystal chandeliers and sconces. There are reports that Civil War cannonballs are embedded in its walls!

Gettysburg, PA

Realtor.com


9. 2270 Main Dr, Saint Albans, WV

Price: $349,000
Why it’s here: 
This six-bedroom log home in the nation’s most affordable state is ideal for entertaining.

Sitting on 3.64 acres, the 3,200-square-foot home has a large covered front patio that’s ideal for hosting gatherings. Built in 2002, it also boasts a large living room and family room.

Saint Albans, WV

Realtor.com


8. 444 Barnumville Rd, Manchester, VT

Price: $420,000
Why it’s here: 
This oh, so enchanting brick cottage in the Green Mountain State appears to have been transported from England.

A rose-covered arbor opens to a beautiful perennial garden with mature plantings, vegetable beds, and fruit trees. Built in 1950, the two-bedroom home was recently updated to include a kitchen with quartz countertops and LED lighting. There is also a detached home office as well as a separate guesthouse that could be used for rental income.

Manchester, VT

Realtor.com


7. 11 Sunrise Ln, Brooklin, ME

Price: $699,000
Why it’s here: 
Overlooking Naskeag Harbor, this sweet summer cottage on a 1.6-acre lot comes with 150 feet of shoreline.

Built in 1942, the two-bedroom, gray-shingled home offers the classic Maine summertime experience. Go fishing from the shore and cook your catch in the cottage’s cozy kitchen. Then enjoy your meals right on the back deck.

Brooklin, ME

Realtor.com


6. 7328 Cotton Plant Cv, Memphis, TN

Price: $595,000
Why it’s here:
Midcentury style makes its way to Memphis. Built in 1955, this five-bedroom home features a number of stunning upgrades.

From the Crab Orchard Stone foyer to the dining room with white oak floors, this home has been thoughtfully modernized over the years. It features walls of windows in many rooms that overlook the private 2.11-acre lot complete with a Zen garden.

Memphis, TN

Realtor.com


5. 1469 Sunshine Ln, Southlake, TX

Price: $24,500,000
Why it’s here: 
Massive and magnificent, this resort-style, 31,234-square-foot home features a basketball court, bowling alley, andd indoor batting and golf area.

Other luxurious amenities include a wine room, home theater, and saltwater pool with double spas. Built in 2016, the gated mansion sits on 4 private acres.

Southlake, TX

Realtor.com


4. 141 Walnut St, Friendsville, MD

Price: $139,900
Why it’s here:
Columns surround this three-bedroom home, although we’re not quite sure why. Located near the Pennsylvania state line, this place will transport you back in time with its brightly colored carpets and wood paneling inside.

Just steps from the Youghiogheny River, the home has two kitchens and is zoned for residential or commercial use. The new buyer will need to bring some creativity to transform this 2,080-square-foot home into something special.

Friendsville, MD

Realtor.com


3. 5419 Woodcrest Rd, Jacksonville, FL

Price: $629,000
Why it’s here:
Free Bird! The childhood home of legendary rockers Donnie, Ronnie, and Johnny Van Zant is available—complete with a plaque certifying its pedigree.

For a simple man (or woman), it’s your chance to live in the home where Lynyrd Skynyrd founder Ronnie and his brothers got their start. The fourplex home sits on eight lots with two units filled with memorabilia. It’s also available for short-term rentals.

Jacksonville, FL

Realtor.com


2. 167 Murray St, Portland, ME

Price: $285,000
Why it’s here: 
This cute log cabin is a diamond in the rough in the middle of the city.

Nothing says “take me home” more than a log cabin, and this affordable option offers a perfect escape. This cozy one-bedroom cottage features a wood-burning fireplace, exposed beams, a loft area, and a retro kitchen. A detached garage could be used for storage or transformed into a studio.

Portland, ME

Realtor.com


1. 21155 Interstate 37 S, Elmendorf, TX

Price: $3,900,000 (now under contract)
Why it’s here: 
After just a couple of weeks on the market, this farmhouse looks to have an offer in place. Located right off Interstate 37 between San Antonio and Corpus Christi, the farm with the “iconic horseshoe gate” is a local landmark.

Beyond the gate, there are 137 acres, which feature lighted tennis courts, a horse racetrack, and even a replica saloon.

A three-bedroom home on the property is a throwback and will likely need to be refreshed. A new owner could use the land for commercial development or continue to use it as a farm.

There are also four ponds (one with a dock), a hay barn, chapel, and numerous other structures on the vast acreage.

Elmendorf, TX

Realtor.com

The post Texas Farmhouse With Iconic Horseshoe Gate Is the Week’s Most Popular Home appeared first on Real Estate News & Insights | realtor.com®.

The Housing Market Just Hit a Turning Point That Could Change the Homebuying Game

Housing Market Turning Point

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Mark your calendars: The month of May might go down as a turning point in the red-hot real estate market that’s been scalding homebuyers for the past few years.

The number of new listings that hit the market last month rose for the first time since June 2019, according to a new report from Realtor.com®. As a result, May home shoppers had 8% more active listings to scroll through compared with this point last year.

“We’re seeing more homeowners decide to sell,” says Danielle Hale, chief economist of Realtor.com. “Buyers can expect more inventory going forward, more homes to choose from.”

Granted, there are still only half as many homes available for sale compared with pre-pandemic levels two years ago. Nonetheless, this recent uptick could offer a glimmer of hope for buyers who’ve been scrambling for homes amid bidding wars and way-over-asking offers.

“For context, even though we’re seeing inventory grow, it remains quite low,” says Hale. “This is one of the reasons that we are still seeing home prices go up and homes [spending] a record-low amount of time on the market for sale.”

How high are home prices now?

Despite growing inventory, many homebuyers might still feel squeezed in terms of their pocketbooks.

In May, the median asking price of a home soared to yet another new apex of $447,000. That’s a 17.6% increase over last year, and up 35.4% compared with May 2020.

Combined with rising mortgage rates (now over 5%), the cost of financing a home is up 50% over a year ago. As a result, some homebuyers have given up their house hunt until home prices and/or interest rates fall back within realistic reach—whenever that may be.

“Monthly [mortgage] payments are higher, and that’s knocked some buyers out of the market altogether, while others are proceeding with caution,” says Hale. “For buyers who are able to continue their home search despite higher costs, more inventory means more choices for them.”

And over time, this could trickle down to help the rest of the homebuyers, too.

“More inventory should eventually translate into a slower pace of sales and [slower] price gains,” says Hale. “With prices still growing at double digits, we’re a long way from price declines, but price growth is likely to slow.”

How fast are homes selling today?

Even though more homes are going up for sale, buyers aren’t wasting any time to make a deal.

Nationwide, the typical home spent just 31 days on the market in May. That’s almost a full week (6 days) faster than last year, and the shortest time on record since Realtor.com first began tracking this data in 2016.

Cities where home prices are falling

The 50 largest metropolitan areas saw a significant jump in median listing prices, with asking prices averaging 13% more than last year. (Metros include the main city and the surrounding suburbs, towns, and smaller urban areas.)

Yet at the same time, many sellers are finally feeling forced to slash their prices. Nationwide, homes with price reductions jumped to 10.5% in May, compared with 6.2% last year. Austin, TX, had the most price reductions of any city (+14.7%), followed by Las Vegas (12.3%) and Phoenix (11.6%).

This softening seen in these red-hot markets might mean that sellers’ expectations have not yet caught up with the realities of this rapidly shifting buyer-seller dynamic.

“Most housing markets remain in seller’s market territory,” says Hale. “But the market is a little more buyer-friendly than we saw last month, and we expect that to continue.”

The take-home lesson for home sellers?

“Sellers should make sure that they’re tapped into the latest local market data when making a decision about their asking price,” says Hale. “If a seller aims too high in this market, he may have to cut the price to attract offers.”

The post The Housing Market Just Hit a Turning Point That Could Change the Homebuying Game appeared first on Real Estate News & Insights | realtor.com®.

Bigger Isn’t Always Better: What Today’s Buyers Are Looking For in a Home

What Today's Buyers Are Looking For In a Home

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Bigger isn’t always better.

After the mad dash by homebuyers to purchase larger places to live in at the height of the COVID-19 pandemic, some experts are making a case for more efficiently designed, smaller homes.

With the pandemic seemingly waning, mortgage rates and home prices rising, and builders struggling to get anything up in the face of supply chain shortages, there’s a convincing argument to be made that home shoppers should consider seeking smaller houses.

A new book by Sheri Koones, “Bigger Than Tiny, Smaller Than Average,” posits that functionality is more important than square footage.

Examples of gaining extra functionality out of existing space include dining rooms that are transformed into exercise spaces or workspaces located on stair landings or in a niche behind a bookcase instead of a dedicated office.

“People want quality rather than quantity,” says Koones, who has written nine books on the subject of small houses and sustainable building. “People want spaces where they can be together.”

Not to be confused with tiny homes (400 to 600 square feet), small homes can be defined as those with 1,400 to 2,000 square feet. They can also be thought of as typical entry-level houses—more affordable homes popular with first-time buyers on limited budgets.

However, the National Association of Home Builders posted statistics showing that homes built in the past year are gaining in square footage.

That’s in contrast with about 30% of architects who work on homes for planned communities surveyed who said they were decreasing the square footage of interior rooms in 2021 residential units, according to the New Home Trends Institute by John Burns Real Estate Consulting.

“They’re removing some of what one architect calls ‘twirling room,’ the extra transition spaces [like hallways] that may not be necessary,” says Jenni Nichols, director of DesignLens, part of the institute.

Today’s buyers might want better—not bigger—homes

Through better design and improved functionality, a small home can still offer the spaces people want.

Nichols reports that architects are responding with flex spaces, repurposed areas, and efficient room sizes to increase functionality.

“People are using an expanded stair landing for an indoor bicycle or small fitness equipment. In many small home designs, the separate dining room is gone in favor of an eat-in kitchen with room for a separate table or two-tiered island with the lower portion used as a table,” Nichols says. “The bedroom niche we used to use for a dresser is now a spot for a desk. … I’ve even seen entries large enough to hang bikes.”

“Home offices do not need to be bedroom-sized,” she says. “Some interior designers are converting closets into ‘cloffices.’”

Of course, no one wants to feel cramped in their home. Koones found that functional small home design often includes high ceilings, open staircases, and well-placed windows. Open floor plans, light-colored cabinets, and wall and creative storage can make a space feel larger. And homeowners typically appreciate some access to outdoor living with a deck, patio, or small yard.

During the pandemic, Teri SlavikTsuyuki surveyed nearly 7,000 homeowners and renters. The 2020 study found the things people felt were missing from their current living situations “had to do with better design and functionality and less to do with space,” Slavik-Tsuyuki says. She is the principal of tstink, a consultancy that works with developers and homebuilders nationally to help them design homes.

Respondents wanted better-equipped kitchens, in-home technology, storage, and better home office space—but not extra rooms, says Slavik-Tsuyuki.

“What didn’t even make the top 15 [responses] was the desire for an additional room or space in their home,” Slavik-Tsuyuki says.

Smaller homes could save money for builders and buyers

Smaller homes typically, but not always, cost less to build. They often use fewer materials and can sometimes be built on smaller lots. Those much-needed savings are often passed on to buyers grappling with record-high home prices and fast-rising mortgage interest rates.

(Median home list prices were up about 14% year over year, to hit a record high of $425,000 nationally in April, according to the most recent Realtor.com® data. Meanwhile, mortgage interest rates went from 3% a year ago to 5.25% for 30-year fixed-rate loans, according to Freddie Mac data.)

Materials used in building homes cost about 23% more than they did just a year ago, according to the National Association of Home Builders. Construction worker wages are up 6%, and land prices and the loans builders need to put up new housing have also risen, according to NAHB. Plus, it’s taking longer to build as supply chain shortages are causing delays, which adds to the rising costs.

“A growing number of buyers will be priced out of the market,” says Robert Dietz, NAHB’s chief economist.

All of this would seem to point to fertile ground for growing smaller homes.

“A smaller home with the right features—a great kitchen, a cool master suite, indoor-outdoor living, for example—and a lower price, and the lower monthly payment that comes with it, would hold real appeal to buyers suffering from sticker shock and discouraged by onerous monthly mortgage payments,” says Frank Anton, former CEO of the real estate media firm Hanley Wood.

The post Bigger Isn’t Always Better: What Today’s Buyers Are Looking For in a Home appeared first on Real Estate News & Insights | realtor.com®.

The ‘Buy It or Build It’ Brothers Reveal the Biggest Mistake Homebuyers Are Making Today

Twin brothers Chris and Calvin LaMont of "Buy It or Build It"

HGTV

It turns out the property brothers are not the only twin bros on the reality renovation scene.

On the new HGTV show “Buy It or Build It,” Chris and Calvin LaMont help homebuyers decide whether they want to purchase an existing house or design their own.

Born in New Jersey, the LaMont brothers attended college at Lehigh University where they both played football (Calvin was a defensive back, Chris a linebacker). After graduating in 2007, they moved to Dallas, where they started their own janitorial and floor cleaning service.

The LaMont brothers of HGTV's "Buy It Or Build It
The LaMont brothers of HGTV’s “Buy It or Build It”

The LaMont Brothers

They soon branched out into home repairs, then restoration. But they spent their spare time getting their real estate licenses and other certificates with their eyes on the prize of buying, selling, and flipping houses.

In 2015, they began officially renovating and building homes. After finding success in the Dallas area, they’re now expanding to other parts of the country, including St. Louis and Augusta, GA.

All the while they were busy building families as well. Chris has two boys, and Calvin has a young girl.

We caught up with HGTV’s newest renovation team recently to chat about the new show, as well as the brothers’ top tips for buying, selling, and building a home today.

What makes your show different from other renovation shows?

Chris: The first thing that sets our show apart is Chris and Calvin LaMont. We live a different life, we have different experiences. We did carpet cleaning, we did the building houses, and now we’re selling homes and building the community. So we’ve done it all. We have a whole bunch of energy, and we have very cool guests as well. Not to mention we have pretty awesome houses.

Calvin: There are so many great shows on TV, so first off, we’re humbled just to be able to have our own show on HGTV. I think how we differentiate our show from other shows is all the energy we bring. We work with some amazing families, and our subcontractors and designers, even some of the vendors, when they get around us there’s a certain kind of energy we generate.

Calvin and Chris LaMont of "Buy It or Build It"
Calvin and Chris LaMont

The LaMont Brothers

Which one of you specializes in building, and who specializes in buying?

Chris: Calvin is the builder brother, I’m the buyer brother. What we do is at the beginning of the show, we talk to a family and show them a house that is a great opportunity to buy and remodel, which I am going to be the one to champion.

What happens after the families make their decisions?

Chris: Once they decide if they’re going to buy it or build it, Calvin and I come together. I am more on the construction side, where I’m dealing with the contractors, the trades. Calvin does more with the designers and things like that.

It’s nice to see it’s not another show where the husband does the building and the wife does the designing.

Chris: [Laughing] Yes, we get a little different dichotomy between Calvin and I. We’re brothers, so I’m going to be on Calvin a little bit harder, because I don’t have to go home and sleep with him.

Calvin: Since Calvin and I are brothers, and especially twin brothers, I believe you can say something crazy to your brother, and it’s not like it’s your wife who’s thinking, “If you’re going to say that to me, I’ll slap you.” Everybody understands brothers and sisters, and says, “Oh, there go two brothers fooling around.”

You’ve been working in the business for seven years now. How has the COVID-19 pandemic changed the way people buy, build, and sell?

Calvin: One thing we’ll say changed is the cost of materials. They’re skyrocketing, which is also complicated by delays in shipping, container issues, all of it. So not only are the materials costs higher, but it’s also more difficult to get those materials here. So you’ve got to pay more for it and get it later. That’s a double whammy.

Chris: One day it’s $20, the next day it’s $30. So the lack of consistency of knowing what your budget will be really hurts the homeowner.

Calvin: But as material costs and lead times increase, sales prices are also increasing. So at least you can sell your property for a higher price when it’s done, and you can sell it fast. That offsets the lead time and the cost to the homeowner. Thank God for that right now—you’re able to make your money back on the sale.

Do you have any tips on how homeowners can manage the challenges of rising materials costs and delays?

Calvin: Pre-source your materials. Take a little time to go to the store and look online at the beginning of the project. Find out what’s available, or how long it’s going to take to get it.

If that product is too expensive or is unavailable, at least you know the look and design you want, so it’s easier for you to find something else to match that.

That way you’ll be better prepared with your designs, so you won’t have to pay more for what you want, spend on a bunch of things you don’t want, or wait way too long for things you don’t really want anyway.

Because of the building and home renovation frenzy over the past couple of years, quality contractors are at a premium. How do you find a good one?

Chris: Get at least three bids. The more prepared you are in terms of what you want and are expecting, the better you’ll be able to understand the right bid.

Calvin: Also get references. And make sure your contractor is licensed. Get comps and confirmation from the bank. Your builder has to be a certified contractor or a pre-approved vendor to the bank.

The LaMont Brothers, stars of the new "Buy It or Build It."
The LaMont brothers

HGTV

We hear nightmare stories about contractors taking forever or just failing to show up. What’s a good way to manage them?

Calvin: Communication and documentation. Communication is so important—you both know what to expect from each other.

Chris: Set expectations and make them clear from the very beginning. Make sure you agree on the price, what you’re looking for, the time, and how often you check in—whether it’s every week or every two weeks—if it’s a long-term project.

You guys renovate a lot of old, run-down houses. Have you ever found anything really strange in one?

Calvin: We found vintage, old-school adult magazines in the walls.

Chris: Sometimes we even find people! Especially in abandoned homes. So whenever you go into a house that’s been abandoned for a long time, make sure you call out “hello” first, and look in the windows and knock, or you might get a big surprise.

What’s the biggest mistake you see homebuyers making today after moving in?

Chris: Don’t try to DIY everything. For example, electricity is not a DIY project. One time we found hot wires that weren’t insulated running under a tub. If you come across something that’s complicated, we advise you call in the right experts.

Calvin: That’s right. Moving walls, adding square footage, changing electrical or plumbing, please get a professional, get permits with the city, and make sure the work is certified and approved. DIY only goes so far.

The post The ‘Buy It or Build It’ Brothers Reveal the Biggest Mistake Homebuyers Are Making Today appeared first on Real Estate News & Insights | realtor.com®.