Hari Kishan of Reuters reported this week on a recent Reuters poll, which predicts that U.S. house prices will rise only 3.3% in 2019, a downgrade from a 4% rise predicted three months ago. Housing analysts polled by Reuters also forecasted price rises slowing to 3% in 2020 and 2.7% in 2021. This is despite the recent decision by the Federal Reserve to not raise interest rates.
Bobby Burch of Think Realty reported on Zillow data last week noting that month-over-month home values nationwide have increased steadily since 2012. “But in April, however, the median home value fell 0.1 percent from March, which is the first time the market has posted a monthly decline in seven years.”
Luci Mutikani of Reuters reported this week that “U.S. home sales fell for a second straight month in April, weighed down by a chronic shortage of more affordable houses,” amidst increasing demand for lower-priced homes.
The slowing pace of home values comes amidst increasingly higher rents, as reported by Veronika Bondarenko of Inman. Reporting on CoreLogic data released last week, Bondarenko notes that rents for single-family homes rose by 2.9% in March, an increase from 2.7% during the same time last year. This trend is particularly prominent in the Southwest, with Phoenix, Las Vegas, and Tucson reporting the largest year-to-date rent increases in the country.
Update on mortgages: Treasury yield drops
Kathy Orton of The Washington Post reported this week that fixed mortgage rates slid for the fourth week in a row, according to the latest data from Freddie Mac. “The 30-year fixed-rate average slipped to 4.06%…It was 4.07% percent a week ago and 4.66% percent a year ago.” The 30-year fixed rate is at its lowest level of the year.
Source: The Washington Post
Sunny Oh of MarketWatch reported also that Treasury note prices rose on Tuesday, with yields pushing to new lows, amidst worries about U.S.-China trade relations. “The 10-year Treasury note yield dropped 6 basis points to 2.268%, its lowest since Sep. 2017.” This has important implications for mortgage rates, because historically as yields drop so too do mortgage rates.
Doug Whiteman of MoneyWise reported this week that although mortgage rates rose in April, in May they have done the opposite. “Mortgage rates fell for the fourth consecutive week and continued the medium-term trend of lower rates since late 2018.”
Adding to the discussion is the Associated Press, noting that the yield on the 10-year Treasury bond note—which affects mortgage rates—dropped from 2.38% to 2.33% Thursday, its lowest level in more than a year. “With mortgage rates at historically low levels, prospective homebuyers have been rushing in.”
A week of real estate lists…
Topping off the week were a number of lists of particular importance to real estate investors, starting with Brandon Cornett of HBI reporting on the 10 U.S. housing markets with the most inventory growth in 2019, which favors cities in the west. Many of these metros are suffering from affordability issues which are resulting in higher inventories, according to Cornett.
Darla Mercado of CNBC reported on the controversy surrounding home affordability in San Francisco using Wealthfont data that outlines the 5 cities that will benefit from outward migration from the Bay area. “Nearly 25% of Wealthfront’s tech clients in the Bay Area plan to leave Silicon Valley” for cities like New York, Austin, Chicago, Seattle, and L.A.
Finally, Daryl Fairweather of Redfin provides some interesting insight into an important demographic: millennials. According to Redfin data, millennials are thriving—buying homes and starting businesses—the most in the following cities: