The Blubber

The US market, dominated by 30-year mortgages, is effectively frozen as homeowners with low rates are reluctant to sell and buyers are squeezed, per Bloomberg.

93% of homebuyers have regrets about purchasing a house in 2023, per YahooFinance.

Read full article: https://finance.yahoo.com/news/6-reasons-93-homebuyers-regrets-173511177.html

According to a recent survey conducted by Clever Real Estate, a staggering 93% of recent homebuyers express regrets about their purchase, shedding light on the current state of the housing market. The sentiment surrounding real estate transactions is marked by skepticism, with a majority of Americans (53%) believing it's an unfavorable time to buy and 51% feeling the same about selling. Furthermore, 58% of recent homebuyers admit to overpaying for their properties.

The inflationary pressures on the housing market are evident in the rising prices, a consequence of the scarcity of available homes in the United States. In 2023, more than 75% of homebuyers found themselves spending an average of $516,500 on homes nationwide. This marks a substantial 31% increase from the average home price in 2022, which stood at $500,156. On average, homebuyers are paying 23% above the national average.

Several factors contribute to this inflationary trend. First and foremost is the impact of inflation on the cost of materials for home construction, leading builders to pass these higher costs onto buyers in the form of elevated purchase prices. Additionally, as the Federal Reserve responds to inflation by increasing interest rates, mortgage rates have surged. In 2021, mortgage rates were below 3%, but today they hover around 7%, translating to a nearly $600 increase in monthly payments for a $240,000 home. Existing homeowners with lower interest rates are hesitant to sell and upgrade to a new home with significantly higher interest rates.

The competitive landscape further complicates the buying process. Traditionally, a 20% down payment was the norm when purchasing a home, but the current high prices have made this standard unattainable for most buyers. In 2023, approximately 55% of buyers put down less than the customary 20% when acquiring their homes. Simultaneously, scarcity has fueled competition in the housing market, leading buyers to pay amounts exceeding the asking price. In 2023, 38% of homebuyers paid over the asking price, up from 31% in 2022. This trend forces buyers to deviate from financial expert Dave Ramsey's advice, which recommends a mortgage payment not exceeding 25% of monthly take-home pay.

As housing prices escalate, a growing number of individuals, including repeat buyers, are exploring the lower price tier—a segment traditionally associated with first-time homebuyers.

Read more: https://unusualwhales.com/news/93-of-homebuyers-have-regrets-about-purchasing-a-house-in-2023