Housing Headwinds Forcing Some Home-Seekers to Give Up the Hunt
New York, NY, June 29, 2022-"Steeper borrowing rates and high prices in the housing market are leading many buyers to give up. That is welcome news for owners of single-family rental homes,” reports the Wall Street Journal.
“Prospective home buyers face affordability issues that are likely to get worse before they get better. Existing-home sale prices reached a record median of $407,600 in May, while sales slid for the fourth consecutive month. Mortgage rates have nearly doubled since January, helping to boost the median mortgage payment for new loans by $513 a month, according to the Mortgage Bankers Association.
“With this trend poised to continue-the Federal Reserve has signaled it will continue lifting short-term rates to combat inflation-single-family landlords say they are well-positioned as more would-be home buyers have little choice but to rent.
“Rents for single-family homes rose 14% this April from a year ago, the 13th consecutive month in which rents grew at a record pace, according to housing data provider CoreLogic.
“‘The more the rates go up, the better it is for this business,’ said Bruce McNeilage, chief executive of rental-house owner Kinloch Partners, at an industry conference last month.
“With rates high, home builders might cut back on the number of houses they construct.
“A shortage of available existing homes was also a factor contributing to rent increases, according to CoreLogic. Home builders are also expected to pull back on how much they build with rates rising and more home buyers reluctant to pay up, analysts say.
“Housing starts, a measure of U.S. home building, fell 14.4% in May from April, according to the Commerce Department. A separate measure of U.S. home-builder confidence, meanwhile, fell for the sixth straight month in June to its lowest level in two years, the National Association of Home Builders said.
“By contrast, 74% of single-family landlords surveyed by John Burns Real Estate Consulting LLC this May said they expected to continue seeing strong or very strong leasing activity over the next two quarters. That response was down from a high of 91% during 2021 but still above where sentiment was before the pandemic.”
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