Mohtashami kicked off the sessions by talking about the differences between the current mortgage rate environment and some of what was seen in the early days of the financial crisis of the 2000s, saying that Americans generally are in a much better position than they were back then.
The Fed has recently indicated that it is not likely to reduce interest rates anytime soon due to economic indicators, and Mohtashami revived a 2022 prediction about what it will take to get the Fed to “break” on rates.
“In 2022, I brought up the premise that the Fed will not pivot until the labor market breaks,” he said. “So, if all of you are looking for a sustained lower move in mortgage rates, that’s what you’re going to see.”
While a lot of the oxygen in the discussion is taken up by inflation, Mohtashami asserts that’s not what the Fed is primarily focused on.
“What the Fed wants to see is the labor market get very soft and to the point that it’s breaking, and then they will find all the confidence in the world to do rate cuts and talk about making sure we have a soft landing,” he said.
Reading the data, he said, might tell a different story about the situation as opposed to strictly paying attention to what Fed officials are saying.
Illuminating data points include wage growth, job openings, the number of people quitting to find higher-paying work, and jobless claims on a weekly or monthly basis. These help observers to monitor changes in the labor market similarly to the Fed, he explained.
From there — and when combined with employment in construction and housing permit data — the thinking around rates will become clearer.
“If the labor market gets softer and the Fed starts getting a little bit more dovish, then not only can the spreads get better, but if the 10-year yield goes down, there’s your 6% [or] sub-6% mortgage rates,” he said. “But this means the labor market has to break. So, we’re all focusing on inflation, but not what really matters.”
Simonsen: More data, less ‘vibes’
A lot of the conversation in the housing market can be focused on “vibes,” or general feelings about the way things are going. Simonsen explained to attendees at The Gathering that focusing instead on real-time data is key to having accurate, predictive indicators about where the market is at and where it will go.
Simonsen began his presentation by talking about an early Altos interaction with both Goldman Sachs and Lehman Brothers. In 2007, right around the time he started Altos Research, he was attending a conference where representatives of both companies were speaking. After they finished speaking, he aimed to pitch both companies on why they might need the kind of data Altos specializes in.
He recalled his pitch.
“I’m Mike Simonsen, my company is Altos Research, and we track every home for sale in the country every week,” he recalled saying. “We check all the pricing, all the supply and demand, and all the changes in that data, and we give that to you because traditional housing data is months behind the curve before you see what’s happening.”
The Lehman representative turned him down flatly, saying, “We’ve got so much more data than you can possibly imagine. We’re making so much money. Don’t even bother,” Simonsen recalled.
The Goldman representative was more open to hearing what he had to say, and 12 weeks later engaged with Altos as a client. A year later, Lehman Brothers went out of business, Simonsen explained.
Simonsen asserted that monitoring changing data points on a daily and weekly basis — including inventory levels, new and pending home sales, and home price data and signals —can help to more efficiently track the impact of mortgage rates.
“I believe that our obligation is to communicate with the data for everybody in the cycle, from the biggest players down to every single homebuyer and seller,” Simonsen said.
He began by looking at fresh inventory data.
“The biggest takeaway from when we’re looking at the inventory numbers is rising rates constitute rising inventory — or put another way, demand slows, inventory grows,” he said. “And that’s actually counterintuitive for a lot of folks who are just casually looking at the data.
“They think, ‘Mortgage rates are higher, nobody’s going to sell, therefore inventory is going to fall when rates fall again. Then we’ll finally get some inventory.’ But the data shows that actually, the opposite is true.”
Multiple years of higher rates will be needed to return inventory to pre-pandemic levels, but inventory growth is rising across the country, particularly in states like Florida and Texas, he explained.
More home sellers are also starting to enter the market. Last year, rising rates depressed seller participation, but higher rates are starting to be seen as more of a norm. A general sense of predictability will allow more sellers to enter the market, he said.
Prices are likely to remain stable due to higher rates, he added.
“More data, less vibes,” Simonsen said.
Fairweather: Less affordability
Daryl Fairweather of Redfin primarily spoke about housing demand; generational participation in the market; the impact of climate events and natural disasters on homebuying activity; and the flexibility that renters might experience, particularly as weather events become more prominent nationwide.
“People are spending more and more of their money on housing, and housing isn’t getting any more affordable,” she said. “We still have this underlying shortage of homes.”
But the presentation was primarily designed to be forward looking, and in that respect, interest rates and inflation are elevated, but the economy is growing. Demographics are also changing, with millennials being the largest generation and Gen Z being smaller but increasingly influential in the economy.
Changing preferences and economic realities are also disrupting long-standing paradigms related to housing in the U.S., she said.
“It used to be that homeownership was the American dream, and now it’s more the American pipe dream,” Fairweather said. “People just feel like it’s a ‘pie in the sky’ thing for them to achieve because housing affordability keeps getting worse and worse.”
Climate is also a very real issue having an impact on the housing market, Fairweather said.
“For a long time I would talk about a changing climate and people would say ‘That’s a problem for the future,’” she said. “But now, we’re seeing insurance costs going up and people are deciding where to live based on the climate. It’s becoming a more and more important issue in the housing market.”
Fairweather shared that Redfin experimented in 2020 to analyze the impacts that climate change can have on homebuying behavior over a three-month period in which users were divided into two pools: one that showed them a view of flood risk and one that did not.
“In the control view, there is no flood risk, and then in the treatment view, you could see flood risk for every single home that’s on Redfin,” she said. “The people that were shown flood risk — if they were previously looking at severely or extremely risky homes for flood risk — they went on to buy homes that had half as much risk when they saw that information,” she said.
This communicates a potential value-add opportunity for mortgage professionals to offer more robust climate information, in addition to where interest rates are projected to go or demographic information.
“[That can help] inform them about how to make the best homebuying decision,” Fairweather said.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
As we head into peak home-buying season, signs of life have begun to spring up in the housing market.
Even so, still-high mortgage rates and home prices amid historically low housing stock continue to put homeownership out of reach for many.
Moreover, the National Association of Realtors agreed to a monumental $418 million settlement on March 15 following a verdict favoring home sellers in a class action lawsuit. Still subject to court approval, the settlement requires changes to broker commissions that will upend the buying and selling model that has been in place for years.
Housing Market Forecast for 2024
Elevated mortgage rates, out-of-reach home prices and record-low housing stock are the perennial weeds that experts say hopeful home buyers can expect to contend with this spring—and beyond.
“The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in an emailed statement. “Hotter-than-expected inflation data and strong payroll numbers are likely to apply more upward pressure to mortgage rates this year than we’d previously forecast.”
Despite ongoing affordability hurdles, Fannie Mae forecasts an increase in home sales transactions compared to last year. Experts also anticipate a slower rise in home prices this year compared to recent years, but price fluctuations will continue to vary regionally and depend strongly on local market supply.
U.S. home prices declined in January for the third consecutive month due to high borrowing costs, according to the latest S&P CoreLogic Case-Shiller Home Price Index. But prices year-over-year jumped 6%—the fastest annual rate since 2022.
Chief economist at First American Financial Corporation Mark Fleming predicts a “flat stretch” ahead.
“If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right,” Fleming said in his 2024 forecast.
Will the Housing Market Finally Recover in 2024?
For a housing recovery to occur, several conditions must unfold.
“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” says Keith Gumbinger, vice president at online mortgage company HSH.com. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”
And, of course, mortgage rates would need to cool off—which experts say is imminent despite rates edging back up toward 7%. For the week ending April 11, the 30-year fixed mortgage rate stood at 6.88%, according to Freddie Mac.
However, when mortgage rates finally go on the descent, Gumbinger says don’t hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound.
“Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says.
He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates.
Nonetheless, Kuba Jewgieniew, CEO of Realty ONE Group, a real estate brokerage company, is optimistic about a recovery this year.
“[W]e’re definitely looking forward to a better housing market in 2024 as interest rates start to settle around 6% or even lower,” says Jewgieniew.
NAR Settlement Rocks the Residential Real Estate Industry
Following years of litigation, the National Association of Realtors (NAR) has agreed to pay $418 million to settle a series of antitrust lawsuits filed in 2019 on behalf of home sellers.
The plaintiffs claimed that the leading national trade association for real estate brokers and agents “conspired to require home sellers to pay the broker representing the buyer of their homes in violation of federal antitrust law.”
Though the landmark settlement is subject to court approval, most consider it a done deal.
The settlement requires NAR to enact new rules, including prohibiting offers of broker compensation on multiple listing services (MLS), the private databases that allow local real estate brokers to publish and share information about residential property listings. The rule is set to take effect in mid-July, once the settlement receives judge approval.
Moreover, sellers will no longer be required to pay buyer broker commissions and real estate agents participating in the MLS must establish written representation agreements with their buyer clients.
NAR denies any wrongdoing and maintains that its current policies benefit buyers and sellers. The organization believes it’s not liable for seller claims related to broker commissions, stating that it has never set commissions and that commissions have always been negotiable.
How Will the New Rules Impact the Buying and Selling Process?
Per the settlement’s terms, the costs associated with buying and selling a home are set to change dramatically.
“The primary things that will change are the decoupling of the seller commission and the buyer commission in the MLS,” says Rita Gibbs, a Realtor at Realty One Group Integrity in Tucson. “It’s gonna cause some chaos.”
While sellers will no longer be able to offer broker compensation in the MLS, there’s no rule prohibiting off-MLS negotiations. Because of this, Gibbs suspects buyers and sellers will continue offering broker compensation off the MLS.
The Department of Justice confirmed it will permit listing brokers to display compensation details on their websites. However, buyer agents will need to undergo the tedious task of visiting countless broker websites to find who’s offering what.
Michael Gorkowski, a Virginia-based real estate agent with Compass, is also trying to figure out how to manage the potential ruling.
“We often work with buyers for many months and sometimes years before they find exactly what they’re looking for,” Gorkowski says. “So in a case where a seller isn’t offering a co-broker commission, we will have to negotiate that the buyer pays an agreed-upon commission prior to starting their search.”
The Changes Will Impact These Home Buyers Most
“In the short term, it is absolutely going to injure buyers, especially FHA and VA buyers,” Gibbs says. “With rare exception, these buyers are not in a position to pay for their own agent.”
Gibbs says that if sellers don’t offer compensation, many buyers who can’t otherwise afford to pay a broker will choose to go unrepresented.
Gorkowski notes that veterans taking out VA loans face a unique challenge under the new rules. “[P]er the VA requirements, buyers cannot pay so it must be negotiated with the seller for now.”
As a result, NAR is calling on the U.S. Department of Veterans Affairs to revise its policies prohibiting VA buyers from paying broker commissions. Even so, there’s skepticism that the federal government will be able to implement changes in time for the July deadline.
Gibbs and Gorkowski are among the many agents especially concerned about first-time home buyers. After July, first-time and VA buyers will be required to sign a buyer-broker agreement stating that they will compensate their broker—but Gibbs says many won’t have the means to do so.
In this situation, agents would likely only show buyers homes where sellers are offering compensation.
“This is a very troubling situation,” Gorkowski says.
Housing Inventory Forecast for 2024
With many homeowners “locked in” at ultra-low interest rates or unwilling to sell due to high home prices, demand continues to outpace housing supply—and likely will for a while—even as some homeowners may finally be forced to sell due to major life events such as divorce, job changes or a growing family.
“I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024,” says Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm.
Housing stock remains near historic lows—especially entry-level supply—which has propped up demand and sustained ultra-high home prices. Here’s what the latest home values look like around the country.
Yet, some hopeful housing stock signs have begun to sprout:
Existing inventory is showing signs of loosening as impatient buyers and sellers have begun to accept the reality of mortgage rates oscillating between 6% and 7%.
Home-builder outlook also continues to get sunnier, trending back up amid declining mortgage rates and better building conditions.
The most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, saw a fourth consecutive monthly rise, surpassing a crucial threshold with an increase from 48 to 51 in March. A reading of 50 or above means more builders see good conditions ahead for new construction.
At the same time, new single-family building permits ticked up 1% in February—the 13th consecutive monthly increase—according to the latest data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development (HUD).
Residential Real Estate Stats: Existing, New and Pending Home Sales
Though some housing market data indicates signs of growth are in store this spring home-buying season, persistently high mortgage rates may hinder activity from fully flourishing.
Here’s what the latest home sales data has to say.
Existing-Home Sales
Existing-home sales came to life in February, shooting up 9.5% from the month before, according to the latest data from the NAR. Sales dipped 3.3% from a year ago.
Experts attribute the monthly jump to a bump in inventory.
“Additional housing supply is helping to satisfy market demand,” said Lawrence Yun, chief economist at NAR, in the report.
Existing inventory rose 5.9%—logging 1.07 million unsold homes at the end of February. However, there are still only 2.9 months of inventory at the current sales pace. Most experts consider a balanced market falling between four and six months.
Meanwhile, existing home prices continue to soar to unprecedented heights, reaching $384,500, which marks the eighth consecutive month of yearly price increases and a February median home price record.
New Home Sales
Sales of newly constructed single-family houses ticked down by a nominal 0.3% compared to January, but outpaced February 2023 sales by 5.9%, according to the latest U.S. Census Bureau and HUD data.
Amid a high percentage of homeowners still locked in to low mortgage rates, home builders have been picking up the slack.
“New construction continues to be an outsized share of the housing inventory,” said Dr. Lisa Sturtevant, chief economist at Bright MLS, in an emailed statement.
Sturtevant notes that declining new home prices are coming amid a recent trend of builders introducing smaller and more affordable homes to the market.
The median price for a new home in February was $400,500, down 7.6% from a year ago.
Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development
Pending Home Sales
NAR’s Pending Homes Sales Index rose 1.6% in February from the month prior even as mortgage rates approached 7% by the end of the month. Pending transactions declined 7% year-over-year.
A pending home sale marks the point in the home sales transaction when the buyer and seller agree on price and terms. Pending home sales are considered a leading indicator of future closed sales.
The Midwest and South saw monthly transaction gains while the Northeast and West saw declines due to affordability challenges in those higher-cost regions.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” said Yun, in the report.
Ongoing Affordability Challenges Could Throw Cold Water on Spring Home-Buying Hopes
Though down from its 2023 high of 7.79%, the average 30-year fixed mortgage rate in 2024 remains well over 6% amid rising home values. As a result, home buyers continue to face affordability challenges.
According to data from its first-quarter 2024 U.S. Home Affordability Report, property data provider Attom found that median-priced single-family homes remain less affordable than the historical average in over 95% of U.S. counties.
For one, the data uncovered that expenses are eating up more than 32% of the average national wage. Common lending guidelines require monthly mortgage payments, property taxes and homeowners insurance to comprise 28% or less of your gross income.
At the same time, home prices and homeownership expenses continue to outpace wage growth.
Consequently, the latest expense-to-wage ratio is hovering at one of the highest points over the past decade, according to the Attom report, despite some slight affordability improvements over the last two quarters.
“Affording a home remains a financial stretch, or a pipe dream, for so many households,” said Rob Barber, CEO at Attom.
Pro Tips for Buyers and Sellers
Here are some expert tips to increase your chances for an optimal outcome in this tight housing market.
Pro Tips for Buying in Today’s Real Estate Market
Hannah Jones, a senior economic research analyst at Realtor.com, offers this expert advice to aspiring buyers:
Know your budget. Instead of focusing on price, figure out how much you can afford as a monthly payment. Your monthly housing payment is influenced by the price of the home, your down payment, mortgage rate, loan term, home insurance and property taxes.
Be flexible about home size and location. Perhaps your budget is sufficient for a small home in your perfect neighborhood, or a larger, newer home further out. Understanding your priorities and having some flexibility can help you move quickly when a suitable home enters the market.
Keep an eye on the market where you hope to buy. Determine the area’s available inventory and price levels. Also, pay attention to how quickly homes sell. Not only will you be tuned in when something great hits the market, you can feel more confident moving forward with purchasing a well-priced home. A real estate agent can help with this.
Don’t be discouraged. Purchasing a home is one of the largest financial decisions you’ll ever make. Approaching the market confidently, armed with good information and grounded expectations will take you far. Don’t let the hustle of the market convince you to buy something that’s not in your budget, or not right for your lifestyle.
Pro Tips for Selling in Today’s Real Estate Market
Gary Ashton, founder of The Ashton Real Estate Group of RE/MAX Advantage, has this expert advice for sellers:
Research comparable home prices in your area. Sellers need to have the most up-to-date pricing intel on comparable homes selling in their market. Know the market competition and price the home competitively. In addition, understand that in some price points it’s a buyer’s market—you’ll need to be prepared to make some concessions.
Make sure your home is in top-notch shape. Homes need to be in great condition to compete and create a strong “online curb appeal.” Well-maintained homes and attractive front yards are major features that buyers look for.
Work with a local real estate agent. A real estate agent or team with a strong local marketing presence and access to major real estate portals can offer significant value and help you land a great deal.
Don’t put off issues that require attention. Prepare the home by making any repairs or improvements. Removing any objections that buyers may see helps focus the buyer on the positive attributes of the home.
Will the Housing Market Crash in 2024?
Despite some areas of the country experiencing monthly price declines, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low for 2024.
“[T]he record low supply of houses on the market protects against a market crash,” says Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions, a non-QM lender.
Moreover, experts point out that today’s homeowners stand on much more secure footing than those coming out of the 2008 financial crisis, with many borrowers having substantial home equity.
“In 2024, I expect we’ll see home appreciation take a step back but not plummet,” says Orphe Divounguy, senior macroeconomist at Zillow Home Loans.
This outlook aligns with what other housing market watchers expect.
“Comerica forecasts that national house prices will rise 2.9% in 2024,” said Bill Adams, chief economist at Comerica Bank, in an emailed statement.
Divounguy also notes that several factors, including Millennials entering their prime home-buying years, wage growth and financial wealth are tailwinds that will sustain housing demand in 2024.
Even so, with fewer homes selling, Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes, sees a price collapse within the realm of possibility, especially in markets where real estate investors scooped up numerous properties.
“If something pushes that over the edge, the consequences could be severe,” said Hnatkovskyy, in an emailed statement.
Will Foreclosures Increase in 2024?
In February, total foreclosure filings were down 1% from the previous month but up 8% from a year ago, according to Attom.
“These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices,” said Barber, in a report.
Lenders began foreclosure on 22,575 properties in February, up 4% from the previous month and 11% from a year ago. Meanwhile, real estate-owned properties, or REOs, which are homes unsold at foreclosure auctions and taken over by lenders, spiked year-over-year in three states: South Carolina (up 51%), Missouri (up 50%) and Pennsylvania (up 46%).
Despite foreclosure activity trending up nationally and certain areas of the country seeing notable annual increases in REOs, experts generally don’t expect to see a wave of foreclosures in 2024.
“Foreclosure activity is still only at about 60% of pre-pandemic levels … and isn’t likely to be back to 2019 numbers until sometime in mid-to-late 2024,” says Sharga.
The biggest reasons for this, Sharga explains, are the strength of the economy—we’re still seeing low unemployment and steady wage growth—along with excellent loan quality.
Massive home price growth in homeowner equity over the past few years has also helped reduce foreclosures.
Sharga says that some 80% of today’s homeowners have more than 20% equity in their property. So, while there may be more foreclosure starts in 2024—due in part to Covid-era mortgage relief programs phasing out—foreclosure auctions and lender repossessions should remain below 2019 levels.
When Will Be the Best Time To Buy a Home in 2024?
Buying a house—in any market—is a highly personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.
Use a mortgage calculator to estimate your monthly housing costs based on your down. But if you’re trying to predict what might happen next year, experts say this is probably not the best home-buying strategy.
“The housing market—like so many other markets—is almost impossible to time,“ Divounguy says. “The best time for prospective buyers is when they find a home that they like, that meets their family’s current and foreseeable needs and that they can afford.”
Gumbinger agrees it’s hard to tell would-be homeowners to wait for better conditions.
“More often, it seems the case that home prices generally keep rising, so the goalposts for amassing a down payment keep moving, and there’s no guarantee that tomorrow’s conditions will be all that much better in the aggregate than today’s.”
Divounguy says “getting on the housing ladder” is worthwhile to begin building equity and net worth.
Frequently Asked Questions (FAQs)
Will declining mortgage rates cause home prices to rise?
Declining mortgage rates will likely incentivize would-be buyers anxious to own a home to jump into the market. Expect this increased demand amid today’s tight housing supply to put upward pressure on home prices.
What will happen if the housing market crashes?
Most experts do not expect a housing market crash in 2024 since many homeowners have built up significant equity in their homes. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
Is it smart to buy real estate before a recession?
If you’re in a financial position to buy a home you plan to live in for the long term, it won’t matter when you buy it because you will live in it through economic highs and lows. However, if you are looking to buy real estate as a short-term investment, it will come with more risk if you buy at the height before a recession.
The average long-term mortgage rate has risen once again this week, with the average 30-year fixed loan now at 7.08 per cent, according to Bankrate’s latest survey of large lenders.
Another mortgage buyer, Freddie Mac, said the average rate on a 30-year mortgage rose to 6.88 per cent from 6.82 per cent last week. In comparison to a year ago, where the rate averaged 6.27%, this is having a genuine impact on American homeowners.
Average 30-year mortgage rates in the 10 largest metro areas ranged from 7.56% in Los Angeles to 6.85% in Chicago.
Rates are slightly higher now compared to the start of this year, keeping some borrowers waiting as the spring begins, which is typically known as the most popular time to buy a home.
The national median family income for 2023 was $96,300, according to the U.S. Department of Housing and Urban Development. The median price of an existing home sold in February 2024 was $384,500, according to the National Association of Realtors (NAR).
How will it affect your payment?
The initial impact of this change was felt in the stock market, with Wall Street sending shares sharply lower, as expectations that the Fed would be cutting rates proved to be premature.
Mortgage rates are influenced by the Fed benchmark rate, although they also reflect other factors, like bond yields and inflation. However, according to Lawrence Yun, chief economist at the NAR, rates for home loans are likely to be unchanged in the near-term due to factors like the strong job market and housing demand.
But that is no consolation for those already with mortgages. When mortgage rates rise, they can prove to be hugely damaging for families struggling to get by, as they add hundreds of dollars a month in costs for borrowers.
With this rise, based on a 20 per cent downpayment and a 7.08 per cent mortgage rate, the monthly payment of $2,063 amounts to 26 per cent of the typical family’s monthly income.
Welcome to the vibrant city of Reno, NV, where the majestic Sierra Nevada mountains provide a stunning backdrop to the bustling cityscape. Known for its lively entertainment scene, outdoor recreational opportunities, and thriving arts community, Reno offers a unique blend of urban excitement and natural beauty. So whether you’re searching for the perfect apartment in Reno or a cozy home for rent in one of the surrounding neighborhoods, you’ve come to the right place.
In this ApartmentGuide article, we’ll cut to the chase, breaking down the pros and cons of moving to Reno. Let’s get started and see what awaits in this vibrant city nestled in the heart of the Silver State.
Pros of living in Reno
1. Outdoor recreation
Reno, NV is a haven for outdoor enthusiasts, with its close proximity to Lake Tahoe and the Sierra Nevada mountains. Residents can enjoy a wide range of activities such as hiking, skiing, snowboarding, and water sports. The city’s beautiful parks and trails also offer opportunities for biking, camping, and rock climbing, making it an ideal location for those who love to stay active and explore the great outdoors.
2. Thriving arts and culture scene
Reno boasts a vibrant arts and culture scene, with numerous galleries, museums, and performing arts venues. The Nevada Museum of Art showcases a diverse collection of contemporary and traditional art. While the Pioneer Center for the Performing Arts hosts a variety of live performances, including theater, dance, and music. The city also hosts several annual art and music festivals, providing residents with ample opportunities to engage with the local creative community.
3. No state income tax
One of the major advantages of living in Reno is the absence of state income tax. This can significantly impact residents’ overall financial well-being, allowing them to keep more of their hard-earned money. The lack of state income tax can make a noticeable difference in the cost of living and provide an attractive incentive for individuals considering a move to the area.
4. Growing job market
Reno has experienced a surge in economic growth and job opportunities in recent years, particularly in industries such as technology, manufacturing, and healthcare. The city’s business-friendly environment and strategic location have attracted major companies, leading to an increase in employment prospects for residents. The growing job market makes Reno an appealing destination for professionals seeking career advancement and stability.
5. Affordable housing options
Compared to other major cities in the region, Reno offers relatively affordable housing options, making it an attractive choice for individuals looking to purchase a home or rent an apartment. The average rent for apartments in Reno, is between $1,162 and $1,747 in 2024. The diverse range of neighborhoods and housing styles provides residents with various choices to suit their preferences and budget, contributing to a more accessible and inclusive housing market.
6. Close-knit community vibe
Reno is known for its friendly and close-knit community vibe, where residents often feel a strong sense of belonging and connection. The city’s welcoming atmosphere and active neighborhood associations foster a supportive environment, encouraging social interaction and collaboration among residents. This sense of community can enhance the overall quality of life and contribute to a fulfilling living experience in Reno.
7. Access to higher education
Reno is home to the University of Nevada, Reno, a renowned institution that offers a wide range of academic programs and research opportunities. The presence of a reputable university enhances the city’s educational landscape, providing residents with access to quality higher education and lifelong learning resources. Additionally, the university contributes to the cultural and intellectual vibrancy of the community, enriching the overall living experience in Reno.
Cons of living in Reno
1. Limited public transportation options
One of the challenges of living in Reno is the limited public transportation options. With a transit score of 24, this can make it difficult for residents who rely on alternative modes of transportation. The city’s public transit system is not as extensive as in larger metropolitan areas, and the reliance on personal vehicles may pose challenges for individuals seeking more sustainable and convenient commuting alternatives.
2. Seasonal weather extremes
Reno experiences seasonal weather extremes, with hot summers and cold winters, as well as occasional droughts and heavy snowfall. The fluctuating climate conditions can impact residents’ daily routines and outdoor activities, requiring them to adapt to the changing weather patterns and prepare for potential environmental challenges throughout the year.
3. Limited diversity in dining options
While Reno offers a variety of dining establishments, the city may have limited diversity in culinary experiences compared to larger urban centers. Residents looking for a wide range of international cuisines and gourmet dining options may find the local restaurant scene relatively limited, potentially impacting their culinary exploration and dining preferences.
4. Traffic congestion
Reno has experienced an increase in traffic congestion due to population growth and ongoing development. The city’s infrastructure may face challenges in accommodating the rising number of vehicles on the road, leading to potential delays and longer commute times for residents. Addressing traffic congestion and improving transportation infrastructure are ongoing considerations for the city’s urban planning and development efforts.
5. Limited cultural diversity
While Reno has a rich arts and culture scene, the city may have limited cultural diversity compared to larger metropolitan areas. Residents seeking a more diverse and multicultural environment may find the local community relatively homogenous, potentially impacting their exposure to different cultural traditions and perspectives.
6. Impact of tourism on local economy
Reno’s reliance on tourism as a major economic driver can have both positive and negative implications for residents. While tourism contributes to the city’s vibrant entertainment and hospitality industries, it may also lead to seasonal fluctuations in employment opportunities and increased demand for resources, impacting the local economy and infrastructure.
Iconic tourist areas such as the Reno Arch and the National Automobile Museum draw visitors year-round, stimulating economic activity but also posing challenges for local residents.
7. Cost of living increases
As Reno continues to experience growth and development, the cost of living in the city has been on the rise. Factors such as housing demand, property values, and overall market trends can contribute to cost of living increases, potentially impacting residents’ financial planning and budgeting. Managing the rising cost of living is an important consideration for individuals looking to establish long-term roots in Reno.
Housing demand reached a new level of enthusiasm during the pandemic, with homebuyers benefitting from extremely low mortgage rates. From the summer of 2020 until much of 2021, average 30-year mortgage rates stayed under 3%. However, as more and more buyers jumped into the real estate market, months of inventory began to plummet and home prices surged. According to the U.S. Census Bureau and U.S. Department of Housing and Urban Development, the national average sales price in the US grew from $383,000 in Q1 2020 to a peak of $552,600 in Q4 2022 – a 44.3% increase in less than two years.
So if you purchased a home during the pandemic, how much is it worth now? To find out, Zoocasa analyzed median home prices in 30 major US cities from January 2020, 2021, and 2022, and compared them with the 2024 median price to see how much they’ve changed over the last 4, 3, and 2 years.
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Median single-family home prices were sourced from each city’s respective real estate board and are from January of each year. Average 30-year fixed rates were sourced from Freddie Mac and are from the first week of each month. The national average sales price in the US for each quarter was sourced from the U.S. Census Bureau and U.S. Department of Housing and Urban Development, Average Sales Price of Houses Sold for the United States [ASPUS], retrieved from the Federal Reserve Bank of St. Louis.
In 14 of the 30 real estate markets we analyzed, the median home price increased by more than $100,000 from 2020 to 2024. In those four years, Californian homes increased the most in value. San Diego and San Francisco homes bought in 2020 appreciated by $265,000 and $247,000 respectively. Los Angeles homebuyers also built a significant amount of equity, with the median home price rising by $211,500 to $750,000 in 2024.
Outside of California, 2020 home purchases in Boston and Miami experienced significant price growth, both increasing by more than $200,000 in four years. For homebuyers in Miami in 2021, the value of their homes experienced the second-highest increase over three years, at $170,000, just below San Diego’s increase of $195,000. But Miami isn’t the only city in Florida where home prices have grown substantially from 2020. In Tampa and Jacksonville, home values have increased by $151,500 and $129,900 since 2020, and since 2021 they have risen by $115,000 and $95,919 respectively.
Other cities where home values increased by more than $100,000 in four years include Denver, Nashville, Dallas, and Salt Lake City. Buyers who bought a home in one of these cities in 2021 also benefited from sizable price appreciation – with home values rising by $100,000 or more in three years.
Though 2020 and 2021 pandemic buyers experienced a significant increase in their home values, some homebuyers who purchased a home in 2022 – when interest rates started climbing – have yet to see equity build. From January 2022 to January 2024, home values dropped in San Francisco by $71,000 and in Brooklyn, they dropped by $51,000. 2022 homebuyers are currently down in six other cities: Washington DC, San Antonio, Memphis, New Orleans, St. Louis, and Salt Lake City. But this doesn’t mean homebuyers in those cities won’t build equity. According to the National Association of Realtors®, in 2023 the median time buyers expected to stay in their home was 15 years. This gives the average homeowner plenty of time for their home to appreciate, and with interest rates coming down, competition will rise and push home prices up once again.
The vast majority of pandemic buyers are in the green, even if they bought their home in 2022. With some of the highest median home prices in the country, it comes as no surprise that Boston, Miami, San Diego and Los Angeles lead the way for 2-year price increases – all up by $50,000 or more. Not every city experienced home price increases of those heights, however. 2022 homebuyers in Philadelphia and Tucson built home equity, but values increased by just $1,250 and $2,500 respectively in two years.
If you’re looking to find an affordable home this spring, give us a call! We can answer any questions you have about your local market and help you navigate the home-buying process.
Mortgage rates surged closer to 7% this week, a blow to hopeful homebuyers this spring.
The rate on the 30-year fixed mortgage increased to 6.87% from 6.74% the week prior, according to Freddie Mac. Rates tilted higher as inflation remained hotter than expected, leading to the Fed putting off any potential rate cuts until summer.
The uptick in rates caused some rate-sensitive homebuyers to retreat from the market, as affordability remains a top concern for the entry-level pool. Those looking to refinance also backed away from their plans as the chances of grabbing a lower rate slipped away.
Still, housing experts remain hopeful about the direction of affordability as more inventory trickles into the market.
“The housing market continues to face elevated mortgage rates, high prices, and low for-sale inventory,” said Hannah Jones, senior economic research analyst at Realtor.com. “As the spring season approaches, many buyers and sellers are getting warmed up to enter the housing market.”
Demand falters as rates jump higher
As mortgage rates rebounded, both refinance and purchase activity faltered — a recurring theme this season.
The volume of applications to refinance a home fell 3% for the week ending March 15 and was 3% lower than the same week a year ago, according to the Mortgage Bankers Association (MBA).
Demand for refinance had gained surprising momentum in the weeks leading up to March 8, with applications up 12%. The sudden jump in activity was due to a larger 24% increase in the government refinance index, the MBA noted, as homeowners who purchased at top rates last year were closely attuned to any opportunity to snatch a lower rate.
But as rates rebounded this week, that window of opportunity closed.
Read more: Mortgage rates hover around 7% — is this a good time to buy a house?
Purchase applicants also retreated from the market, with the volume of applications to buy a home down 1% for the week and 14% lower than the same week a year ago.
“Most homebuyers are sensitive to interest rates, which is why we see mortgage applications increase when rates fall and decline with rates increase,” said Bright MLS chief economist Dr. Lisa Sturtevant.
“However, not all homebuyers are equally sensitive to interest rates,” she added. “The number of cash buyers has increased. In many markets, these cash buyers are not investors but regular home buyers who have accrued significant equity in an existing home that they can roll over into the purchase of a new home.”
Just getting into a home has become more expensive. Mortgage News Daily, which tracks rates daily, revealed that rates surpassed 7% last week and have remained above that threshold as of March 20.
For first-time homebuyers, in particular, the fluctuation of rates has been a tough blow — especially as inventory of entry-level homes remains scarce and competition for homes within their price point is picking up.
According to the National Association of Realtors, the average price of a previously owned home increased to $384,500 in February, marking the eighth consecutive month of year-over-year price gains. The median price was also 5.7% higher than a year earlier.
“Additional housing supply is helping to satisfy market demand,” said NAR chief economist Lawrence Yun. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”
Buyers and sellers need to adjust to ‘new normal’ in rates
Mortgage rates were elevated after data last week showed inflation and payroll numbers came in stronger than expected, which fueled concerns about the timing of the Fed’s plans to issue rate cuts this year.
Federal Reserve officials expect three interest rate cuts this year, which should help ease pressure on overall borrowing costs when they come to pass. However, when those rate cuts will happen remains to be seen.
“There is some uncertainty in the housing market as we head into spring,” said Sturtevant. “The Federal Reserve likely will put off rate cuts until the summer, which suggests that mortgage rates will not come down much in the first half of the year. Buyers and sellers seem to be adjusting to the ‘new normal’ of mortgage rates above 6.5%.”
Still, there’s some hope that buyers will see mortgage rates start to ease sooner rather than later.
“As we enter the spring homebuying season, we still anticipate rates will decrease in the coming months,” said MBA president and CEO Bob Broeksmit.
Gabriella Cruz-Martinez is a personal finance and housing reporter at Yahoo Finance. Follow her on X @__gabriellacruz.
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Existing-home sales jumped unexpectedly in February to the highest monthly increase recorded in a year, according to the National Association of Realtors (NAR).
Total existing-home sales — which includes previously owned single-family homes, townhomes, condominiums and co-ops — increased 9.5% from January to a seasonally adjusted annual rate of 4.38 million in February. But sales are still down 3.3% from last year, when 4.53 million were recorded for February 2023, a NAR report released Thursday said.
“Additional housing supply is helping to satisfy market demand,” said NAR chief economist Lawrence Yun. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”
While Americans may want to buy houses, scarce supply, inflated prices and high mortgage rates have made home ownership unaffordable for many. Housing inventory in 2022 dipped to its lowest point since the Federal Reserve began tracking the data in 2016, while housing costs reached record highs.
AMERICANS ARE MAKING A MASS EXODUS FROM BIG CITIES ACCORDING TO CENSUS BUREAU DATA
Home prices and associated costs have followed the same inflationary trend as the rest of the economy since President Biden assumed office in January 2021.
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Compared to three years ago, the median price for existing-home sales has increased 25%, from $307,400 in January 2021 to $384,500 in February 2024, according to NAR data.
Existing home sales were 6.6 million when Biden took office and have since fallen to 4.38 million, according to Thursday’s report — a 34% decrease.
Not only are house prices up and supply down — home loan costs have skyrocketed. As of February, the monthly mortgage payment on an existing home was $2,001, according to NAR. That compares to a January 2021 reading of $1,009 and represents a walloping 98% increase.
US HOMEBUILDER SENTIMENT UNEXPECTEDLY RISES TO HIGHEST LEVEL SINCE JULY
Mortgage rates, which were an average 2.79% in January 2021, are now 6.78%.
For those who can’t afford a home or don’t wish to purchase one, rent is also more expensive. The average monthly rent for a two-bedroom apartment in the U.S. was $1,132 in January 2021. Now the average rent for an apartment that size has climbed 20% to $1,363 per month, according to data from apartmentlist.com.
Housing costs are expected to keep rising so long as there is strong demand and limited supply.
“Home sales dipped in February compared to a year earlier because not enough homes were on the market to meet demand,” explained Holden Lewis, a home and mortgage expert with NerdWallet.
HOW IT STARTED … HOW IT’S GOING: INFLATION UNDER BIDEN DRIVES UP COSTS FOR BREAD, BUTTER, CHICKEN
According to the NAR report, total housing inventory at the end of February — the number of homes listed for sale — was 1.07 million units, a 5.9% increase from January and 10.3% surge from 970,000 units one year ago.
“Just 1.07 million existing homes were for sale at the end of February. In the same month five years earlier, before the pandemic, there were 1.63 million homes on the market. Consequently, many more homes were sold back then,” Lewis said. “Because demand exceeds supply, buyers are competing with each other and driving up prices.”
Regional sales climbed in the West, South and Midwest, but remained unchanged in the Northeast, the report said. Year-over-year sales declined in all regions.
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Housing became more expensive in all major U.S. regions as well, according to NAR. The median existing-home price for all housing types in February was $384,500, an increase of 5.7% from February 2023, according to NAR.
“Due to inventory constraints, the Northeast was the regional under-performer in February home sales but the best performer in home prices,” Yun said. “More supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences.”
Original article source: How it Started… How it’s Going: Home sales down, housing prices, mortgage rates up since Biden took office
Mike Fratantoni, the chief economist and senior vice president of research and industry technology at the Mortgage Bankers Association (MBA), addressed three major challenges in the housing market during testimony before the U.S. House of Representatives‘ Financial Services Subcommittee on Housing and Insurance.
The biggest challenge in today’s housing market is the lack of inventory, Fratantoni said in his written statement on Wednesday.
“While the demographic fundamentals of the market continue to support strong housing demand for the next several years, the market is millions of units short of that needed to support this demand,” he said.
The silver lining, however, is that builders have picked up their pace of construction. New homes now account for roughly one-third of homes on the market, which compares to a more typical historical share of 10%.
As a result, a large delivery of multifamily units is expected over the next few years, but the recent trend in elevated mortgage rates has exacerbated this supply shortfall, Fratantoni explained.
Compounding the lack of supply is the proverbial “lock-in“ effect that has disincentivized homeowners to sell their current properties, thereby giving up a low mortgage rate and taking on a new loan at a much higher rate.
“A homeowner that was able to refinance into a low-3% or high-2% mortgage rate is just much less likely to list their property,” Fratantoni told lawmakers. “It doesn’t mean they’re never going to list … but it’s a friction in the system, so it’s going to keep existing inventory much lower than it otherwise would be.
“That’s been a support to home prices, but for someone trying to get into the market, it’s really an obstacle.”
Concerns over Basel III Endgame
Fratantoni also expressed concern that the recent Basel III Endgame proposal would accelerate the trend of the mortgage market shifting away from depository institutions, particularly large banks, toward non-depositories and independent mortgage banks.
The Basel Endgame proposal — issued by the Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) in July 2023 – boosted capital requirements for residential mortgage portfolios at large U.S. banks in comparison to international standards.
Under the draft proposal, 40% to 90% risk weights would be assigned for large banks that issue residential mortgages, depending on the loan-to-value ratio, which is 20 basis points above the international standard.
MBA’s comment letter highlighted the overly conservative risk weights on mortgages — particularly for low down payment loans favored by first-time homebuyers — and the lack of benefit for loans with mortgage insurance. It also mentioned the punitive treatment of mortgage servicing rights (MSRs) and the burdensome treatment of warehouse lending as being particularly negative for the mortgage market.
The Basel Endgame proposal would increase capital requirements on all three types of mortgage activities by banks — low down payment loans held on balance sheets, mortgage servicing and warehouse lending.
As a result, the Basel Endgame proposal “poses a significant risk to the stability of the housing finance market if it is not modified across all of these dimensions,” Frantantoni stated.
Rising cost of property insurance
Addressing the increased cost of property insurance for both prospective homebuyers and current homeowners is a priority for the MBA.
“The lack of availability and cost of homeowners insurance … it’s not only impacting the ability of borrowers to qualify for a loan, but increasing payments for existing homeowners to such an extent really puts them on an unstable path, so it really is front and center for us right now,” Fratantoni told lawmakers.
The average cost to insure a $300,000 home surged by 12% in 2023, reaching $1,770 per year, according to an Insurify report.
Certain insurance carriers have also limited their participation in natural disaster-prone states like California and Florida, given the increases in risks and costs.
Over the past 18 months, seven of the 12 largest insurance companies by market share in California have either paused or restricted new policies in the state, highlighted by the departures of State Farm and Allstate in June 2023.
Due to these departures and price hikes, the California FAIR Plan, the state’s insurer of last resort, has seen enrollment double over the past few years.
“Although these increases in premiums and reductions in availability of insurance have been concentrated in certain markets at this point, the concerns regarding property insurance continue to build for our lender members in the residential, multifamily and commercial sectors — and for all their customers,” Fratantoni said.
Moderation in mortgage rates led to a pickup in demand for residential real estate, but limited inventories across the country hindered actual home sales, the Federal Reserve reported in its Beige Book survey of regional business contacts that was published Wednesday.
Several Fed districts reported that a dearth of for-sale inventory contributed to faster home price growth since January. The spring homebuying season, which got underway a bit earlier than usual, was off to a good start in districts like New York and Dallas.
“Should mortgage rates fall, demand for residential real estate would increase, encouraging buyers who had been waiting on the sideline to move forward with home purchases,” according to the Beige Book.
The outlook for future economic growth remained generally positive as economists, market experts and business organization leaders interviewed for the report noted expectations for stronger demand and less restrictive financial conditions over the next six to 12 months.
The Beige Book, which was compiled by the Federal Reserve Bank of San Francisco using information gathered on or before Feb. 26, does not reflect the most recent rise in mortgage rates, which have surpassed 7% on HousingWire’s Mortgage Rates Center.
The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee. The FOMC is expected to leave its benchmark interest rate unchanged when policymakers gather on March 19-20. The benchmark rate was last changed in July 2023, when it was raised to a range of 5.25% to 5.5%.
Federal Reserve Chair Jerome Powell reiterated Wednesday that policymakers still need to gain “greater confidence” that the battle against inflation is conquered before cutting interest rates.
“We believe that our policy rate is likely at its peak for this tightening cycle,” Powell said during testimony before the House Financial Services Committee. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”
Following are excerpts of statements on housing conditions from the Federal Reserve districts, drawn from the newly released Beige Book.
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Boston: Residential Realtors expressed growing optimism as both property listings and pending home sales increased. Contacts cited modest declines in mortgage rates since last fall as a likely reason for buyers’ increased willingness to enter the market.
Although inventory levels remained low, listings increased by modest to significant margins around the First District in recent months, lending increased optimism for sales moving forward. Still, contacts emphasized that the number of units for sale stayed far short of what they considered a balanced market, and that a dearth of inventories had contributed to faster house price growth from 2022 to 2023.
New York: Housing markets strengthened as the spring selling season got underway a bit earlier than normal. While inventory generally remained exceptionally low, inventory in New York City has begun to normalize. Many buyers who were waiting for a reprieve in mortgage rates have started to return with the intention of refinancing later. Though mortgage rate lock-in continues to limit new listings, particularly in the New York City suburbs, listings have increased in upstate New York as people have continued to leave the area for warmer climates.
Still, with such limited inventory, home prices have continued to press higher. Bidding wars were prevalent in the New York City suburbs but have been more limited in upstate New York.
Philadelphia: The inventory of for-sale properties remained extremely low as it has since the pandemic began. But real estate agents noted that higher interest rates have severely limited new listings over the past year and were responsible for the significantly lower level of closings.
New-home builders continued to report steady sales at relatively strong levels, in part because of the lack of existing for-sale homes. Most expect their pipeline of contracts to keep construction busy through the year.
Cleveland: Residential construction contacts reported that demand increased as mortgage rates declined. But real estate agents indicated existing-home sales changed little because inventory remained low.
Looking ahead, homebuilders and real estate contacts anticipated that demand would increase should mortgage rates fall, encouraging some “customers [who had been] waiting on the sideline” to move forward with home purchases.
Richmond: Respondents noted an increase in listings and buyer activity, but the elevated mortgage rate made buyers more tentative on making home purchase decisions. Sales prices have flattened, but there were still multiple offers on many homes.
Days on market increased slightly but remained below historic averages. The home construction market was constrained as it was difficult to find land and to receive permitting for new developments. Residential construction costs started to moderate this period.
Atlanta: As mortgage rates retreated from cyclical highs, homeownership affordability improved throughout the district. But home sales in most major markets ended the year well below seasonal norms and remained significantly behind pre-pandemic levels. Potential buyers locked into historically low mortgage rates remained reluctant to move, and migration into the district moderated through 2023, resulting in diminished housing demand.
Existing-home inventory levels were also suppressed by the “lock-in effect,” resulting in flat to moderate price growth in many markets. Demand for newly constructed homes was boosted by the lack of existing homes and builders.
Chicago: Residential real estate activity was down moderately, although prices were steady overall. High interest rates and a low supply of existing homes for sale continued to hold back activity.
St. Louis: Residential real estate sales have slowed since our previous report. Contacts in Arkansas and Tennessee reported that the low end of the market continues to be strong, while contacts in Missouri and Southern Indiana reported higher-end homes selling better. Rental rates for residential real estate have remained unchanged since our previous report.
Minneapolis: Single-family development remained soft, with modest but spotty increases in some district markets compared with a year earlier. A Minnesota contact said that “consumers quite abruptly stopped spending discretionary income on larger home improvements.”
Dallas: Home sales rose during the reporting period, and contacts noted that the spring selling season was generally off to a good start. Cancellation rates were down, buyer incentives were less prevalent, and builders said they were raising prices slightly in some markets.
Outlooks were positive, although contacts cited economic and political uncertainty, diminished affordability and tight lending.
San Francisco: Real estate activity rose slightly overall. Residential construction strengthened. Demand for single-family homes picked up slightly, as mortgage rates, though still elevated, moderated a bit in recent weeks. To attract reluctant homebuyers, some homebuilders began offering variable-rate mortgages at below-market interest rates, which revert to market pricing after a year, at which point buyers are reportedly expecting rates to be lower.