The real estate market has been one of the strongest pillars of the economy following the greatest financial downturn since the Great Depression. Amid low interest rates and a great deal of intervention from policymakers, home buyers received an added incentive to purchase a home. Meanwhile, sellers enjoyed low inventory levels and rising prices. However, a new survey finds that sellers might be losing their control on the market.
In the third quarter, 72% of real estate agents said now is a good time to sell a home, down from 86% in the previous quarter, and the first drop of the year, according to Redfin, an online estate brokerage. On the other side of the closing table, 55% of agents said now is a good time to buy, up from 46% at the beginning of the year. Thirty percent of agents also said that sellers are having difficulties getting their home to appraise for the contract purchase amount.
"At the end of this summer, you could smell the rubber on the road from buyers hitting the brakes," said Redfin San Diego agent Sara Fischer. "The cutthroat competition and frenzied demand has relaxed considerably."
Although interest rates are still low on a historical basis, the recent rise in home prices is affecting home affordability. In the second quarter, 69.3% of new and existing homes sold were affordable to families earning the U.S. median income of $64,400, according to the National Association of Home Builders. That is down from 73.7% in the first quarter and is the first reading below 70% since late 2008.
In August, home prices across the nation increased on a year-over-year basis for the 18th consecutive month. According to CoreLogic, a property information and analytics provider, home prices jumped 12.4% in August from a year earlier. In fact, home prices have logged double-digit gains for seven straight months. Home prices are still 17.1% below their bubble peak in April 2006, but every state posted an annual increase in August.
Going forward, the survey from Redfin finds that only 5% of agents believe home prices will rise a lot in the next 12 months, down from 44% at the beginning of the year. Meanwhile, 11% of agents believe prices will drop a little over the next year, compared to only 4% in the second quarter.
(Copyright © 2013 USA TODAY)