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Evan Paul and his wife thought 2022 would be the year that they would finally purchase a house.
Both scientists in the biotech sector, the couple were eager to settle down in Boston.
Paul, 34, says that “We kind of reached that point in our lives when we were financially stable and we wanted children, and we wanted just to kind of settle down.”
Although they did have a baby girl this year, the home they longed for never came to pass.
The initial hurdle was high home prices. The Pauls were initially overwhelmed by the high home prices when they began their search. Boston’s low interest rates had sparked a buying frenzy at the time, and the Pauls were constantly outbid.
Paul says that there would be “you know, two dozen other offers, and they would all be $100,000 more than asking.” “Anytime we tried to put off an open house until the weekend, it was gone before it could be even looked at.”
The Fed’s constant interest rate hikes followed. The Pauls couldn’t afford to buy the houses they had been considering after a few months of mortgage rates rising.
Paul says that at first, he began to lower his expectations and look for smaller homes in less desirable locations. But, he soon realized that high mortgage rates were driving his family away.
“The anxiety got to me, and we decided to quit and keep waiting.”
Sellers and buyers put their plans on ice
The housing market has been affected by the sharp rise in mortgage rates. Many buyers have stopped looking because they cannot afford the home they wanted a year ago. Sellers are wary about listing their homes due to the high mortgage rates which could loom over their next purchase.
Lawrence Yun (chief economist, National Association of Realtors), says that “people are stuck”.
Yun and others refer to the market as “frozen”, in which home sales activity has fallen for 10 consecutive months, according NAR. This is the longest run of declines since NAR began tracking sales in late 1990s.
Susan Horowitz, a New Jersey real estate agent, says that “the sellers aren’t putting their houses up for sale and the buyers out there, certainly their power has changed with rising interest rate, so there is a bit of a standoff.”
The standoff has not had a significant impact on prices, it seems.
Despite the decline in sales activity, home prices have remained high because inventory has remained low. In November, the inventory of unsold homes dropped for the fourth consecutive month to 1.14 Million.
Horowitz says, “Anything on the market is one salmon running upstream and every bear has just woken from hibernation.”
However, this trend is starting to buck in some markets.
Agent Elijah Shin was not able to see as many people at an open house in Hollywood for a charming starter property this weekend. He saw more people than he did last year.
He says that this home would have sold a year ago. “This home will also sell. It will just take a little longer.
You can also go on for a while.
In August, the cottage was first put on the market. It’s still waiting for an offering, four months later.
Copyright 2022 NPR. Copyright 2022 NPR.
Transcript:
HOST: STEVE INSKEEP
The country’s current home-buying frenzy seems to be over. Ten consecutive months of falling home sales has been recorded. This is the longest stretch of declining home sales in over two decades. NPR’s Arezourezvani talked with sellers and buyers.
AREZOU REZVANI BYLINE: Evan Paul, a thirty-four-year old, entered 2022 believing that this year would bring his family a home.
EVAN PAUL : We have just reached a point in our lives that we are financially stable. We wanted to have children, so we decided to settle down.
REZVANI – Paul and his wife, both in the biotech industry were able to have a baby girl a few weeks ago. They never moved out of their condo with two bedrooms. It was initially due to high home prices in Boston. Low interest rates caused a frenzy in home-buying, which was outbid every single time.
PAUL: You know, there would be two dozen more offers and they all would be $100,000 more than what you asked.
REZVANI : The Fed raised interest rates. After a few months, the Fed raised interest rates again.
PAUL: Yeah. I was eventually overcome by anxiety. We decided to give up and continue on.
LAWRENCEYUN: The market has far fewer buyers.
REZVANI – Lawrence Yun is the chief economist at the National Association of Realtors. According to him, while buyers such as the Pauls are slowing down, sellers are reluctant to enter the market due to the high cost of a mortgage.
YUN: In order to reenter today’s market, they will need to give up the 3% and may be able to get a new loan with much higher interest rates.
REZVANI – This is what’s causing a bit of a freeze on the housing market, according to Susan Horowitz (a New Jersey-based agent in real estate).
SUSAN HOROWITZ – The sellers aren’t putting their homes on the market. The buyers are there, and the power of their dollars has changed with the rising interest rates. There is some tension.
REZVANI – Surprisingly this standoff has not had much impact on prices. Despite the decline in sales activity, home prices remain high.
HOROWITZ – Because there is no inventory. Everything that is put on the market will be the only salmon upstream. Every bear is just out of hibernation.
REZVANI : However, this trend is starting to buck in some markets.
Agent Elijah Shin’s open-house in Los Angeles has been slow lately. He sweeps the sidewalk and waits for the occasional visitor.
ELIJAH SHIN : I believe we are in transition again. Although no one can predict the future, we seem to need some market corrections. It was an odd few years.
REZVANI: He provides a detailed tour for anyone who is interested…
SHIN: This can also be a closet. This is the master suite.
REZVANI: He connects with potential buyers whenever he can.
SHIN: Do you want a flyer or a brochure? If you’d like to…
REZVANI : However, things have changed.
SHIN: This property would have been sold a year ago. This home is likely to sell. It will just take a little longer.
REZVANI : Or for a longer time. In August, this little home was put on the market in Hollywood’s most sought-after neighborhoods. It’s still waiting for an offering, four months later. Arezou Rezvani, NPR News, Los Angeles.
(SOUNDBITE FROM KYLE MCEVOY EZZY’S “GARDEN”) Transcript provided NPR, Copyright NPR.
