Homeowners are staying put as new buyers grapple with persistently high housing costs this year. Inventory is tight and home sales are tight Hit multi-decade lows.
But if you need another sign of turmoil, just ask people whose livelihoods depend on the real estate market how they are doing.
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according to Monthly report By Alignable 45% of real estate agents who own their own companies said they had trouble paying their office rent in November. This is 5% higher than in October and 10% higher than the September reading.
The numbers don’t surprise Corey Burr, senior vice president at TTR Sotheby’s International Realty, who points to recent events High interest rates This led to higher mortgage rates and pushed home sales into a lull.
“I think the Fed put us in this position where it essentially froze the residential real estate market by keeping interest rates low for a long time, and then increasing them too much, too quickly,” Burr says.
“It has created incredible distortions in our market.”
Slow sales hurt realtors
Burr, who has worked for more than 36 years in real estate and initially had his own company in Chevy Chase, Maryland, said he knows what it’s like to experience the highs and lows of the housing market when Own a small business.
“We are at a point in the real estate cycle that is more difficult for brokerages, especially smaller firms that have less market share, and that have less assets than larger brokerages to weather the storm,” Burr says.
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With potential buyers wary of the upside Mortgage rates And Undo trades At a record rate, home sales have been extremely slow over the past year, causing more agents to go out of work or have their income reduced.
In October, pending home sales were down 1.5% from September and 8.5% from a year ago – indicating a decline in pending home sales. Minimum number of pending sales Since the National Association of Realtors began tracking that statistic. It’s worse than it was during the 2008 financial crisis.
Burr also expects the number of realtors across North America to shrink as the market shrinks.
More than 60,000 agents left the industry in the six months leading up to May, according to NAR data analyzed by Reventure Consulting, which provides real-time data on the housing market.
The market may improve next year
despite of Mortgage rates have fallen Over the past few weeks, Burr says, they haven’t been low enough yet to convince homeowners who were previously locked in interest rates of 2% to 3% to put their homes up for sale and move, keeping inventory in the crunch.
He also notes that the period between early November and early January tends to be very slow, but he expects an uptick in the spring if mortgage rates continue to decline.
With inflation declining, many experts expect that the Fed has reached the end of its tightening cycle, and may offer some interest rate cuts in 2024. This will likely push mortgage rates lower, providing a much-needed respite to the housing market. .
Some analysts already expect mortgage rates to decline next year. NAR Chief Economist Lawrence Yun And he expected In early November, mortgage rates could range between 6% to 7% next spring, and home sales could rise 13.5% in 2024.
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