1. Slow but steady increase in inventory and transactions
According to Altos Research, new listing volume is up 2.6% from last week — an impressive 30% surge compared to last year. This shift marks a departure from previous years, where inventory was on a declining trend heading into the spring home buying season.This gradual uptick in inventory is a promising indicator of sales transaction volume in the coming months, offering buyers more options to shop from. However, we anticipate a similarly slow, but steady increase in transactions. According to the National Association of Realtors (NAR), pending home sales only rose by 1.6% month-over-month in February 2024. However, buyer demand shows signs of picking up with mortgage applications increasing 6.2% in March 2024 compared to last year according to Mortgage Bankers Association (MBA) Builder Application Survey.2. Homebuyer demand for new construction heats up
The NAHB/Wells Fargo Housing Market Index, a key indicator of new home sales, climbed to 51 in March. This marks the highest level since July 2023, suggesting a growing appetite among potential buyers for newly built homes.3. Home buyers should get comfortable with near 7% rates this spring
While mortgage rates declined at the end of last year, they have since returned to above 7%. As of April 17, the average rate on 30-year fixed-rate mortgage rate was at a five-month high of 7.43%, according to Mortgage News Daily. Prospective homebuyers this spring need to remember the old saying “marry the house, date the rate,” and expect rates to stay near 7% for the spring season, with hopes of steadily declining rates as the year progresses.At Pacaso, we offer co-owners innovative financing options. Currently, 50% of our “Available now” Pacaso homes are eligible for buyer financing at 5% or less with assumable mortgages.4. Home prices continue to rise
Despite slowly increasing, the low inventory of homes for sale has placed significant pressure on prices, resulting in above-average monthly appreciation. According to CoreLogic, home prices across the country experienced a year-over-year increase of 5.5% in February 2024. On a month-over-month basis, home prices grew by 0.7% in February 2024 compared with January 2024.5. Housing affordability hurdles persist
Rising home prices continue to pose a significant hurdle for potential buyers. A recent Redfin report highlights this affordability challenge, revealing that a typical household would need to earn $113,520 annually to afford the median-priced home in the U.S. — a 35% increase compared to average household incomes. This squeeze led to homeownership affordability hitting its lowest level since the 1980s, driven by record-high home prices and a 23-year high in mortgage rates.To combat affordability challenges, buyers are exploring innovative solutions like co-ownership. Pacaso's inaugural Co-Ownership Growth Report revealed a 21% year-over-year increase in co-ownership across the U.S. Similarly, Opendoor’s 2024 report focusing on first-time homebuyers by Opendoor found that approximately a quarter of these buyers opted not to purchase their homes with a significant other. Instead, they turned to alternative arrangements including friends (11%), siblings (7%), colleagues (3%), and even individuals they connected with online (3%).In response to evolving market dynamics, Pacaso has recently undertaken a nationwide expansion of our listings to appeal to a broader audience, with listings now starting at $200,000. Additionally, we have introduced DIY legal services to support individuals interested in co-owning primary or secondary homes independently. This initiative opens up new opportunities for buyers across the country.
