Real estate investors have done well. Rents have risen and home price appreciation has been quite exceptional. In the past three years, the typical rental rate and typical home price have soared by 16.4% and 35.5%, respectively. Over the past five years, those figures are 24.9% and 50.8%. These returns were occurring at a time of low-cost financing.
Now it’s time for investors to sell. Home prices have already retreated in some markets—especially in the west, where the median price is 8% lower than a year ago.
There are 44 million renter households: Half live in midsized to large apartment buildings, while the other half rent single-family, duplex, triplex or quadplex units. Although apartments are not necessarily as competitive as single-family rental units, a 40-year high in multifamily construction means many units will be hitting the market in the upcoming months and into next year. Rent growth has already turned the corner from acceleration to deceleration, still rising in most markets but at a slower pace. Looking at single-family construction, builders are still underproducing compared to the historical average, but new-home sales are back to pre-COVID levels. Home builders are making profits, stock prices for publicly listed construction companies have risen by around 50% in the past year, and inventory of new homes is plentiful.
That’s not the case for existing homes. The latest inventory of 1 million is a historic low, and that’s hindering existing-home sales. Multiple offers are still happening on mid-priced homes. We need 50% growth in listings to reach pre-pandemic 2019 levels. We need 100% growth to reach an adequate supply. This is where investors come in—or rather, come out. The National Association of REALTORS® is calling for a federal incentive to help bring needed inventory to the market: temporary capital gains relief for investors who sell to a first-time buyer or first-generation buyer.
Days on Market Trend Down
Properties remained on the market for a median of 18 days in May, down from 22 days in April but up from 16 days in May 2022. Seventy-four percent of homes sold in May were on the market for less than a month.
Affordability and Supply
A new NAR and realtor.com® study estimates how many homes are “missing” from the market by income level. The largest shortage of homes is in the price range that middle-income buyers can afford.
Find out what home styles—both interior and exterior—are seeing dramatic increases in online searches.
Homeowners are trying to maximize their space by taking on remodeling projects geared toward creating new living areas while overhauling their property’s style, according to the 2023 Houzz U.S. Emerging Summer Trends Report. Houzz, a home improvement site, analyzed the latest search insights from homeowners, designers and contractors to identify the following top trends.
Online searches for “finishing a basement” have increased significantly over the past year as more homeowners look to turn their large, open spaces into a family or recreation room. Basements are being refinished to create a spot for watching movies, playing games and exercising, according to the report. The search term “basement golf simulator” posted one of the biggest upticks among home improvement-related searches, the report shows.
More homeowners are looking up to expand their spaces. Houzz found that “rooftop deck” and “rooftop patio” searches increased by 90% and 40%, respectively. The trend is mostly occurring in metro areas where outdoor space is a hot commodity, the report notes.
More homeowners are showing an interest in renovating their bathrooms to include accessible features that enable them to live in their homes longer as they age. Houzz found that searches for “age-in-place bathrooms” and “handicap-accessible bathrooms” more than doubled compared to a year ago. Popular add-on features include handheld shower heads, ADA-compliant bathroom vanities and curbless showers.
A greater number of homeowners are showing a desire to swap out their pristine, all-white kitchens for something a little more rugged. “Industrial kitchens” are generating greater interest, particularly for features like “kitchen track lighting,” “pull-down kitchen faucets,” “stainless steel countertops” and a “brick kitchen wall.” Houzz researchers also noticed a growing interest for “concrete countertops” and “copper kitchen backsplashes” that fit within this style.
More than half of renovating homeowners surveyed say they’re designing their kitchens for entertaining. Searches over the past year have grown for “open-concept kitchen to family room” and “island cooktop and ranges,” the survey says. These features allow hosts to prepare a meal as they engage their guests. Searches also have doubled for a “walk-in kitchen pantry,” with a space to not only tuck away kitchen goods but also hide toasters, coffee makers and other smaller appliances.
Open-concept design is popular in the kitchen, but homeowners still desire some privacy. Houzz researchers saw an uptick in interest in design elements that create temporary separation like a “living room divider,” “Shoji screen” or “partition wall.”
The fifth wall is becoming the new place for an accent wall. Paint and texture are dressing up more ceilings. The trends report shows searches have spiked over the past year for “high-gloss ceilings,” “painted ceilings” and “black ceilings.” “Tongue-and-groove ceilings”—which are wooden planks that fit side to side across a ceiling—are also up significantly, with searches growing by 73% over the past year, Houzz reports.
Classic architectural elements are being mixed in with contemporary ones. Notably, search trends are up for features commonly associated with Colonial and Spanish Colonial styles. For example, homeowners are searching for Colonial design elements like “front porches” and “formal living rooms” as well as “Spanish Colonial exteriors.” “Homeowners are hiring architects and designers to help them honor the roots of their homes, while updating them with a cohesive, intentional look,” the report says.
Homeowners are making the most of their outdoor space and aren’t letting limited size shrink their plans. Searches for “small swimming pool,” “small plunge pool,” “small pool house” and “small screened-in porch ideas” grew over the past year, the report notes. Also, researchers report that searches for “small outdoor kitchens” have more than doubled over the past year.
Find out what home styles—both interior and exterior—are seeing dramatic increases in online searches.
Homeowners are trying to maximize their space by taking on remodeling projects geared toward creating new living areas while overhauling their property’s style, according to the 2023 Houzz U.S. Emerging Summer Trends Report. Houzz, a home improvement site, analyzed the latest search insights from homeowners, designers and contractors to identify the following top trends.
Online searches for “finishing a basement” have increased significantly over the past year as more homeowners look to turn their large, open spaces into a family or recreation room. Basements are being refinished to create a spot for watching movies, playing games and exercising, according to the report. The search term “basement golf simulator” posted one of the biggest upticks among home improvement-related searches, the report shows.
More homeowners are looking up to expand their spaces. Houzz found that “rooftop deck” and “rooftop patio” searches increased by 90% and 40%, respectively. The trend is mostly occurring in metro areas where outdoor space is a hot commodity, the report notes.
More homeowners are showing an interest in renovating their bathrooms to include accessible features that enable them to live in their homes longer as they age. Houzz found that searches for “age-in-place bathrooms” and “handicap-accessible bathrooms” more than doubled compared to a year ago. Popular add-on features include handheld shower heads, ADA-compliant bathroom vanities and curbless showers.
A greater number of homeowners are showing a desire to swap out their pristine, all-white kitchens for something a little more rugged. “Industrial kitchens” are generating greater interest, particularly for features like “kitchen track lighting,” “pull-down kitchen faucets,” “stainless steel countertops” and a “brick kitchen wall.” Houzz researchers also noticed a growing interest for “concrete countertops” and “copper kitchen backsplashes” that fit within this style.
More than half of renovating homeowners surveyed say they’re designing their kitchens for entertaining. Searches over the past year have grown for “open-concept kitchen to family room” and “island cooktop and ranges,” the survey says. These features allow hosts to prepare a meal as they engage their guests. Searches also have doubled for a “walk-in kitchen pantry,” with a space to not only tuck away kitchen goods but also hide toasters, coffee makers and other smaller appliances.
Open-concept design is popular in the kitchen, but homeowners still desire some privacy. Houzz researchers saw an uptick in interest in design elements that create temporary separation like a “living room divider,” “Shoji screen” or “partition wall.”
The fifth wall is becoming the new place for an accent wall. Paint and texture are dressing up more ceilings. The trends report shows searches have spiked over the past year for “high-gloss ceilings,” “painted ceilings” and “black ceilings.” “Tongue-and-groove ceilings”—which are wooden planks that fit side to side across a ceiling—are also up significantly, with searches growing by 73% over the past year, Houzz reports.
Classic architectural elements are being mixed in with contemporary ones. Notably, search trends are up for features commonly associated with Colonial and Spanish Colonial styles. For example, homeowners are searching for Colonial design elements like “front porches” and “formal living rooms” as well as “Spanish Colonial exteriors.” “Homeowners are hiring architects and designers to help them honor the roots of their homes, while updating them with a cohesive, intentional look,” the report says.
Homeowners are making the most of their outdoor space and aren’t letting limited size shrink their plans. Searches for “small swimming pool,” “small plunge pool,” “small pool house” and “small screened-in porch ideas” grew over the past year, the report notes. Also, researchers report that searches for “small outdoor kitchens” have more than doubled over the past year.
Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine, editor of the Styled, Staged & Sold blog, and produces a segment called “Hot or Not?(link is external)” in home design that airs on NAR’s Real Estate Today radio show. Follow Melissa on Instagram and Twitter at @housingmuse.
Coldwell Banker is proud to have a powerhouse network of agents and teams whose dedication to guiding consumers home is unparalleled! Cheers to all who have been recognized in the RealTrends “America’s Best Real Estate Professionals” rankings. Now in its 11th year, the RealTrends America’s Best rankings honor the top real estate agents and teams across the United States.
Your outstanding achievements are a true testament to your dedication and commitment to the real estate industry. We look forward to your continued success and seeing you serve as a shining light to those in your community.
Linked below are the agents and teams recognized in the “America’s Best” rankings by category.
Billy Joel has long been known as Long Island’s golden boy, but the musician is saying buh-bye to his home base out east.
The Piano Man has listed his Oyster Bay mansion for a cool $49 million, The Wall Street Journal reported on Friday. The 26-acre property, known as Middlesea, sits along the North Shore waterfront and includes a 20,000-square-foot main house, along with a beach house, a guest apartment, a gate house, and more.
Tyler Sands One of the bedrooms
Currently, the central home is undergoing renovations, but it includes five bedrooms and eight bathrooms, along with covered porches, brick columns and archways, and a two-story foyer with black-and-white marble floors. Plus, the home comes with a suite of amenities suited to a rock star: There’s a spa and hair salon, a bowling alley, and a wine cellar. At one point, the home sported an indoor pool—along with the two outdoors—but Joel had it covered up to make a music room, the listing agent Bonnie Williamson with Daniel Gale Sotheby’s International Realty told the WSJ.
Joel decided to list the house while renovations were still occurring because “whoever buys will want to do their own selections of how to paint and decorate and perhaps style the kitchen,” Williamson said. It should be completed by the late summer or early fall.
Tyler Sands A living area
Over the years, Joel acquired bits of property to amass his enormous estate: He paid $22.5 million for the first 14 acres in 2002, then snapped up the surrounding land. He’s decided to give it all up now because he and his wife spend most of their time in Florida, where he bought a $22 million home in 2015.
The Grammy winner’s decision to forgo his Long Island abode will be another family’s gain, however. Along with all of the various indoor spaces, the property features a floating dock, boat ramp, and helipad, allowing you to skip the New York City traffic and arrive in style. And the various other homes on the acreage give you at least another 10 bedrooms for guests to enjoy.
So although Joel may no longer be living in a New York state of mind, you sure can be.
WESTFIELD, N.J. (April 19, 2023) – Coldwell Banker Realty is pleased to announce the formation of its new Westfield office, located at 209 Central Ave. in Westfield. Led by Branch Vice Presidents John Bradley and George Kraus, Coldwell Banker Realty in Westfield is the new home base for approximately 300 affiliated real estate agents serving home buyers and sellers throughout the Union County area.
As part of Coldwell Banker Realty’s reorganization of its regional footprint, agents from the company’s former Westfield East and Westfield West offices have merged at the former’s existing downtown location. The restructured office will be called Coldwell Banker Realty in Westfield. The Westfield East and Westfield West offices had a long history of ranking among the top Coldwell Banker offices in New Jersey and nationwide.
“We no longer define our success by the number of offices we operate, but rather by the number of markets we dominate,” said Tracy Devine, regional vice president of Coldwell Banker Realty in New Jersey and Rockland County, N.Y. and Greater Philadelphia. “This merger blends two powerhouse offices that are among the most successful Coldwell Banker Realty offices in New Jersey and the entire country. John Bradley and George Kraus are phenomenal managers leading the premier collective of agents serving Westfield and surrounding areas.”
Devine added, “The new Coldwell Banker Realty Westfield office reflects the modern workspace. It is an updated, 8,800 square-foot facility, providing agents and clients with a centralized meeting place, administrative support and white-glove service. At this prime location, agents can build their professional network while serving a broader area.”
Coldwell Banker Realty was the No. 1 real estate brokerage in New Jersey for 2022, based on closed sales volume and total number of units closed, per MLS data.
About Coldwell Banker Realty in New Jersey and Rockland County, N.Y. and Greater Philadelphia
Coldwell Banker Realty in New Jersey and Rockland County, N.Y. and Greater Philadelphia is a leading residential real estate brokerage company with approximately 5,600 affiliated sales associates. Coldwell Banker Realty is owned by a subsidiary of Anywhere Real Estate Inc. (NYSE:HOUS), the largest full-service residential real estate services company in the United States. Visit ColdwellBankerHomes.com.
More than 1,300 apartments will fill an empty office building in Lower Manhattan, making it the biggest residential conversion project in the country, its owners say.
The building at 25 Water St. was once home to the Daily News and JPMorgan Chase, which cleared out earlier in the pandemic. New owners are using decades-old rules that ease residential conversions in the Financial District to gut the offices, carve out courtyards and add 10 floors to the 22-story structure.
The owners have not submitted the residential plan for final approval from the city’s Department of Buildings, but city signoff is a formality in Lower Manhattan office conversions as long as the new design meets zoning and construction rules. Mayor Eric Adams and Gov. Kathy Hochul both say these types of conversions can help supercharge housing supply in places like Midtown and Flushing, Queens but first need the state to tweak zoning rules. State lawmakers are considering those changes, along with a new office conversion tax break, in the state budget currently being negotiated.
Repurposing an office building is usually quicker than erecting a new structure from the ground up, said architect Eugene Flotteron, whose company CetraRuddy is designing the 25 Water St. floor plans. The developers say the apartments should open in about two years.
But changing cubicles and water coolers into bedrooms and kitchens isn’t as simple. Nor is it cheap.
Owners GFP Real Estate and Metro Loft plan to scoop out two courtyards from the center of the building and wrap apartments around them, said GFP head Brian Steinwurtzel. That’ll allow the building to meet light and air requirements. The owners also plan to raise the height to 32 stories while still complying with density restrictions, Steinwurtzel said.
“I think this one is more complex than other ones that have been done,” Steinwurtzel said. “There’s significant structural work that needs to be done and that is very expensive.”
The two firms bought the building, until recently known as 4 New York Plaza, in December for about $250 million and will spend hundreds of millions more on the conversion. Steinwurtzel declined to give a total cost estimate, but cited a $400 to $500-per-square-foot rate for most conversions. The building at 25 Water Street is more than 1.1 million square feet.
Steinwurtzel said the new building will attract a range of tenants motivated by a massive planned gym, ground-floor shops and two swimming pools.
“The expectation is that there certainly will be younger single folks who are just sort of starting out in New York, up to families with children that will be looking for these larger units,” Steinwurtzel said. “It’ll help to continue the transition of the financial district into a 24/7 mixed-use neighborhood.”
They plan to squeeze more than 50 market-rate and luxury apartments ranging from studios to four bedrooms onto each of the existing floors, fitting them together like Tetris pieces, according to initial blueprints. The owners and architects allowed Gothamist to view the floor plans but refused to release them for publication. The layout shows the complicated process of carving up commercial spaces set far from windows and turning them into places where people actually live.
Most of the apartments will have “home offices” that can double as bedrooms, but not all of those will have windows — a controversial arrangement backed by Adams. Other rooms described as offices will face the adjacent Vietnam Veterans Memorial Park, but the windows still won’t comply with current bedroom rules because they don’t face a street or courtyard.
“Anyone who rents it will have no idea they’re not in a pretty awesome bedroom with the windows,” Flotteron said.
For now, the imposing facade and narrow window slits give off prison vibes, but the building actually won an architectural award when it first opened in the 1960s. It was designed to look like a punch card and housed telecommunications offices and equipment.
One of the challenges in repurposing the building is ensuring that its windows comply with city rules.
David Brand/Gothamist
The developers plan to expand the windows, tear down the brown brick facade and turn it gray, renderings show
On Tuesday morning, construction workers walked through the dust-filled lobby and loading bay, where asbestos removal notices hung from the walls and jagged scraps of metal stuck out of dumpsters. They were clearing out the offices in the floors above to make way for a complicated transformation project.
Flotteron said they will turn the loading docks and existing curb cuts into a parking garage and entryway,
“The great thing for us about conversions … is they really are treasure chests that you need to get into and explore and find all this great stuff that you can reuse,” Flotteron said.
Despite a deep affordable housing shortage taking the heaviest toll on the poorest New Yorkers, the project will not have any apartments with rents capped for low-income renters. That’s typical of office conversions in the Financial District, where there are no affordability requirements.
That makes it more profitable for building owners to take on expensive conversions. But it’s also fueling skepticism and opposition from affordable housing activists and local lawmakers contemplating new conversion rules for Midtown, Flushing and the Bronx’s Hub.
Members of the City Council grilled Adams administration officials on affordability requirements during a recent Council hearing on his office conversion plans, which would allow owners to turn offices into apartments in buildings constructed before 1991.
“We especially need to build affordable housing with convenient access to well-paying jobs, high-quality schools and other services,” said Land Use Committee Chair Rafael Salamanca at the hearing. “Manhattan neighborhoods should be accessible to more than just the wealthiest.”
But Steinwurtzel, the 25 Water St. developer, said state and city lawmakers will have to pay up if they actually want to turn office shells into homes.
“The politicians, if they want to create housing in New York City out of these buildings, they will need to provide significant incentives,” Steinwurtzel said. “And if they want to provide affordable housing, those incentives would have to be even higher.”
Many homeowners have turned their attention to enhancing their outdoor space since the pandemic began—and that may pay off at resale, according to a new survey from the National Association of REALTORS® and the National Association of Landscape Professionals. Ninety-two percent of REALTORS® say they recommend that sellers improve their curb appeal prior to listing, finds the 2023 Remodeling Impact Report: Outdoor Features. REALTORS® most often recommend general landscaping maintenance, standard lawn care service and tree trimming.
“It’s no surprise that nearly all REALTORS® and most homeowners place a high value on the curb appeal of a well-maintained yard,” says NALP CEO Britt Wood. “Healthy outdoor living and green spaces help the environment, increase home values, make communities more desirable and improve people’s mental and physical health.”
The COVID-19 pandemic changed the way Americans use their homes for daily living, relaxation and entertainment, adds Jessica Lautz, NAR’s deputy chief economist and vice president of research. “Homeowners have embraced their outdoor spaces, transforming them into oases with pools, patios, plants and greenery,” Lautz says. “These outdoor features … can also attract buyers if the owner wants to sell.”
Prioritizing Outdoor Projects for Resale
Most homeowners indicate a desire for an in-ground pool or an outdoor fire feature, but the ROI on these items may not be as high as simple lawn care and landscape maintenance, the report finds. The survey defines “standard lawn care service” as six seasonal applications of fertilizer and/or weed control on a 5,000-square-foot lawn and “landscape maintenance” as mulch application, regular lawn mowing, pruning shrubs and planting about 60 perennials or annuals.
The features that make homeowners happiest, however, aren’t necessarily the ones that earn the most at resale. The least expensive projects, such as standard lawn care service, have the highest cost recovery but one of the lowest “joy” rankings from homeowners, according to the survey. Instead, the report found that the following outdoor projects received the highest satisfaction marks among homeowners:
In-ground pool
Landscape lighting
New patio
New wood deck
Fire feature
On the other hand, the items that ranked the lowest on homeowners’ “joy” scale were:
Outdoor kitchen
Tree care
Standard lawn care service
Installing a yard irrigation system
The majority of landscape professionals surveyed say the size and scope of outdoor home improvement projects have increased since the pandemic began. REALTORS® surveyed say the landscape projects they’ve seen most often since the pandemic began are the addition of an in-ground pool, landscape maintenance and a new patio.
This is a byline post from Liz Gehringer, President and CEO, Anywhere Franchise Brands, Acting President, Coldwell Banker Affiliate Business, COO, Coldwell Banker Real Estate
Housing inequalities, a growing wealth gap in the United States and a lack of resources among disenfranchised communities are major restrictions preventing an increase in Black homeownership. To ensure that people of color have equal access to homeownership, the National Association of Real Estate Brokers (NAREB) is prioritizing several initiatives including shrinking racial inequalities and financial hurdles.
As we enter National Fair Housing Month, I had an opportunity to connect with four leaders who are working tirelessly to create equal paths to homeownership for all. Lydia Pope, president of NAREB, is kicking off this series by sharing the initiatives the organization is investing in to address fair housing.
Gehringer: What is the current state of fair housing?
Pope: While we’ve made great strides in creating equal opportunities to homeownership, there remains a lot of room for growth. Marginalized communities continue to face racial inequalities and lack access to the same resources that their white counterparts are afforded in the search of their dream home. NAREB is hoping to bring awareness to these issues to help tackle them and guide people through them.
Gehringer: To what extent have Black Americans been impacted by housing and wealth inequalities?
Pope: Homeownership for the Black community has declined nearly 20% since 2008. Despite the enactment of the 1968 Fair Housing Act, which was designed to offer legal protections from housing discrimination, the homeownership gap continues to expand further disenfranchising the most marginalized. In 1960, 38% of Black Americans owned homes while White homeownership was at 65%, a 27-point gap. Forward to 2021 and the United States has experienced the largest homeownership spread since 1890 with 44.6% of Black Americans owning a home and 74.2% for Whites, a 29.6-point gap.
Gehringer: Are there any dynamics and obstacles impacting Black homeownership?
Pope: It is evident that blatant, race-related barriers are hindering the expansion of Black wealth in America. The average white family possesses eight times the wealth of a Black family of similar stature. The median net worth for Black households is $24,000 compared to $188,000 for White families. The cycle can only be broken by improving the major driver of Black wealth – intergenerational homeownership that yields prosperity and family economic security.
America’s public and private sectors claim to be committing to a more equitable society, one with opportunities for wealth and success regardless of race or ethnicity. But to make racial equity a reality, government, corporate and civic leaders must address the wealth and home ownership gaps that diminish the aspirations, hopes, and dreams of Black families and individuals.
For many Black families, one of the biggest hurdles is saving money for the down payment on a house. Their income level may qualify them for a mortgage, but they struggle to come up with the upfront costs. In passing H.R. 5376, the original Build Back Better Act, the House included a $10 billion down payment grant program for first-time, first-generation homebuyers. Options currently exist for down payment assistance, but most come with onerous conditions such as adding a second mortgage or stricter wage and credit score requirements making it harder to qualify for a mortgage. As the Senate pares down H.R. 5376 to attract support needed for passage in reconciliation, it’s critical that the down payment provisions remain in the bill.
Gehringer: How has fair housing progressed over the past few years?
Pope: The Economic Policy Institute has reported that African Americans have made significant advances in educational achievement, health, wealth, and wages since the fair housing act was passed.
President Joe Biden has issued a directive specifically calling on the U.S. Department of Housing and Urban Development (HUD) to undo historic patterns of segregation and other types of discrimination in a manner that affirmatively furthers fair housing. Recently, this department made available over $19.4 million in American Rescue Plan funding to agencies working to address the unequal impact the COVID pandemic has had on communities of color, low-income communities and other vulnerable populations. This funding provides resources and support to victims of housing discrimination and is being used to conduct housing education and outreach activities, as well as address fair housing inquiries, complaints and investigations.
HUD has also endorsed the use of Special Purpose Credit Programs to help address inequities in barriers to credit and homeownership. The Special Purpose Credit Program is a tool that allows banks to meet the specific needs of these historically disadvantaged groups. HUD Secretary Marcia Fudge has asked government agencies, including the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve, Federal Housing Finance Agency and National Credit Union Association to expand homeownership opportunities for those who have been and continue to be systemically excluded from the housing and credit markets.
Gehringer: How is NAREB tackling fair housing issues in 2023?
Pope: To address racial inequalities and financial hurdles faced by Black Americans, NAREB is prioritizing the elimination of loan-level price adjusters and penalty fees for borrowers to access down payment assistance. The organization is also working to expand down payment assistance, especially for first time homebuyers, and is leveraging special purpose credit programs. Lastly, NAREB strives to end discriminatory and abusive appraisal practices and ultimately, aiming to fix the broken and out-of-date finance system in the housing industry.
Making a Difference
I am honored to champion and uplift the voices of the industry’s biggest trailblazers in housing equality. Throughout the month of April Coldwell Banker will be hosting a full series right here on the Blue Matter blog, sharing how Coldwell Banker-affiliated leaders are working to reduce housing inequities and ways you can serve the mission.
The demise of three banks last week has been sending shockwaves through an already fragile economy. Could it have an impact on real estate, too?
“The Silicon Valley Bank failure, along with a few other banks, means that the Federal Reserve cannot be so aggressive in raising its short-term interest rates,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “Therefore, mortgage rates will decline.”
Mortgage rates had been steadily rising in recent weeks, with the 30-year fixed-rate loan averaging 6.73% last week, according to Freddie Mac. The Fed has been making a series of aggressive rate increases, which may indirectly influence mortgage rates, over the last few months. Home buyers have been up against affordability woes, as mortgage rates are nearly double what they were just a year ago.
But as of Monday, mortgage rates had fallen about 50 basis points lower than last week. Yun says that when there is a panic in the financial market, investors often shift money toward safer assets, which tends to be U.S. Treasury notes and bonds. Mortgage rates lately have tended to follow the movement of Treasury yields, which are falling.
“So, a panic in a sense leads to an automatic stimulus to the economy from lower interest rates,” Yun says in public comments on LinkedIn. “The housing sector nearly always responds to falling mortgage rates, especially when there are job additions to the economy.” And if rates do head lower, more home buyers undoubtedly would still enter the housing market in response, he adds.
Bank Failures Spark Panic
Last Friday, the shutdown of Silicon Valley Bank became the second largest bank failure in U.S. history and the largest since the 2008 financial crisis. The bank was known as a large supporter of tech startups. About 15% of the loans in Silicon Valley Bank’s portfolio were residential and commercial mortgages, The Real Deal reported. Signature Bank and Silvergate Capital, both big lenders in the cryptocurrency space, also shuttered their doors.
To help avoid mass panic, the Federal Reserve, Federal Deposit Insurance Corp. and Treasury Department created an emergency program to backstop all deposits using the Fed’s emergency lending authority. That granted depositors full access to their funds as of Monday, and the agencies vowed to make all depositors whole. Usually, banks only insure up to $250,000 per account ownership category through the FDIC, an agency that was created in 1933 after thousands of bank failures. In this case, the federal government’s move to backstop uninsured money has been viewed as an unusual step.
President Joe Biden has been offering assurance to Americans that banks are safe. He vowed on Monday to “strengthen oversight and regulations of larger banks so that we are not in this position again.”
Meanwhile, the bank failures may be a sign of trouble ahead for the tech industry. “Some businesses reliant on funding from Silicon Valley Bank [and others] may lack capital to continue its business or have to cut back,” Yun says. There could be some job losses ahead as a result, especially among some California tech companies, he adds. Local housing markets may be hampered by those job losses. But “broadly across the country,” Yun says, “more home buyers will enter the market [because of] lower mortgage rates.”
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WESTFIELD, N.J. (April 19, 2023) – Coldwell Banker Realty is pleased to announce the formation of its new Westfield office, located at 209 Central Ave. in Westfield. Led by Branch Vice Presidents John Bradley and George Kraus, Coldwell Banker Realty in Westfield is the new home base for approximately 300 affiliated real estate agents serving home buyers and sellers throughout the Union County area.
