The housing market is a tale of two people: The buyer and the seller
The housing market is a tale of two people: The buyer and the seller
Home prices rose to an all-time high in July, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index released Tuesday. Meanwhile, mortgage rates have climbed to over 7% on a 30-year fixed mortgage.
High interest rates and high prices is an unusual combination for the housing market, and it’s changing the whole dynamic between buyers and sellers. “Marketplace’s” Kristin Schwab and Matt Levin are tag-teaming this one.
Kristin Schwab: OK, so we’re gonna role play a bit here. I’m going to be a would-be homebuyer, which is actually kinda what I am. I don’t own a home, but maybe someday.
Matt Levin: Don’t give up, Kristin. I do own a home, so I’ll be playing the part of potential seller.
Schwab: And in this market, there are way more buyers. People like me, like there always seem to be.
Kama Burton, a realtor in Riverside County in Southern California, said she’s currently working with more buyers than sellers.
Schwab: I know it’s not an ideal time to buy a home: Mortgage rates are superhigh. But I’m sick of paying basically as much to rent a one-bedroom apartment in New York as what Matt pays for a three-bedroom house in Sacramento.
Feelings are one thing, but many buyers in the market today need to buy a home.
“Whether it’s a life-changing event, your employment is changing, your family may be growing, and sometimes just maybe you want a change of scenery,” Burton said.
Levin: Of course, those life-changing events also happen to sellers.
But given the age of your typical homeowner, it’s often a different set of life changes — a divorce, a hip replacement, got to move closer to the grandkids.
Schwab: But do you love your grandkids enough to lose your 3% 30-year fixed mortgage?
“A lot of people who might want to move are being discouraged from moving simply because they realize they’ll have to pay dramatically higher financing costs on their new house relative to the mortgage they’ve locked in on their old house,” said Craig Lazzara, managing director at S&P Dow Jones Indices, which publishes Case-Shiller data.
Levin: It’s me, hi, I’m the problem. It’s me. I have a 3% mortgage rate, and I do not want to give that up.
Schwab: And not only is Matt stubborn, but he’s got quite the ego.
Levin: Back when I bought my house in 2021, which in housing seems like eons ago, it was a bidding war. If I’m gonna sell, I expect a line outside the open house. Daryl Fairweather, chief economist at Redfin, said sellers like me haven’t adapted to reality.
“And I think that’s why we’re seeing so few listings in those markets. Sellers don’t want to take anything less than the peak,” Fairweather said.
Even though Fairweather said the peak was probably inflated. And hey, which peak isn’t?
Schwab: And it’s not just sellers who have unrealistic expectations right now. I do too — the buyer. It turns out that me, the buyer, I’m the problem too.
“The buyers are hoping it’s 2008,” said Michael Orbino, a managing broker with Compass in Seattle. “And so we have this kind of split in peoples’ perception of the market.”
Schwab: Since the pandemic began, everything has been so wacky. Buying a house a couple years ago was stressful.
Levin: We looked for nine months until we found our home.
Schwab: And you might have paid a lot. But at least you ended up with a house.
“We went through an extreme period where everybody felt like a winner. Usually in a zero-sum game, there’s a winner and a loser. In this case, it’s not that simple,” Orbino said.
Levin: It turns out neither of us are very happy with the market right now.
Schwab: But you are a homeowner.
Levin: Yeah. And I’m not going to sell anytime soon.
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