After the financial crisis and subprime mortgage collapse, home prices took an unceremonious fall as millions of homes faced foreclosure and were sold at heavily-discounted prices. Home prices hit a floor around 2012 and began to recover at accelerated levels, pricing out many prospective homebuyers.
The national median home price jumped from $252,000 in the first quarter of 2018 to $265,000 in the second quarter — the highest quarterly median price in the history of the HOI series.
“The recovery in housing has been really slow to get back on track,” said Mark Vitner, managing director and senior economist at Wells Fargo Securities. “The numbers are all moving in the right direction, but they’re not moving there very quickly and I don’t think that’s going to change all that much.”
Investor Flight
One positive byproduct of higher rates for homebuyers is lessened competition for housing, particularly when it comes to outbidding investors wielding all-cash offers during the offer process. Furthermore, with interest rates rising, investors’ monthly rental profits are less if the property was purchased with financing, which lessens the number of competition from investors as opposed to buyers who intend to occupy the home as their primary residence.
“It might cause investors to reconsider buying an investment property,” Matthew Graham, chief operating officer of Mortgage News Daily, said Tuesday on CNBC’s “Power Lunch.” “Even those all-cash investors that would buy with cash and then refinance into an actual mortgage loan might not see as much cash flow from that, and that could open the door for first-time homebuyers to get a loan, assuming they can find a house.”
For more real estate trends, visit ETFTrends.com