Wits’ End would make an appropriate name for a new subdivision in today’s wild housing market. While there’s not yet such a place on the map, many would-be buyers are quickly running out of patience.
Their frustration is not necessarily due to high loan rates, but rather the fact that house prices have outpaced inflation by a whopping 150 percent over the last 50-odd years, according to researchers at Anytime Estimate, a division of the Clever Real Estate buyer-agent matching service.
If prices had increased at the same rate as inflation since 1970, the median home price nationally would be just $177,788. That’s less than half the actual median of $408,100. Put another way, since 1970, inflation has increased 644 percent. House prices, on the other hand, are up 1608 percent.
Speaking of inflation, it likely plays a role in financially strapped homeowners asking lenders to forbear or adjust their monthly payments. But there is some good news on that front.
“The percentage of borrowers in forbearance declined for the 21st consecutive month,” said Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association. “The percentage of borrowers with existing loan workouts who were current on their mortgage payments improved for the first time since June 2021.”
As of this writing, two American real estate companies have pulled out of Russia because of the Ukraine war: Century 21 and Sotheby’s. C-21 had no employees in Russia, but an independently owned affiliate operated more than 75 branches under its banner. Sotheby’s said it had a “very limited” franchise business in the country.
“Long gone are the days when buyers could go home and ‘sleep on it.’”
The late, great Sen. Everett Dirksen is often credited with the quip, “A billion here, a billion there, and pretty soon you’re talking about real money.” It hasn’t come to that in the housing sector, at least not yet. But consider these numbers from Redfin:
Nationwide, 5,897 homes sold for at least $100,000 above asking price in the first 45 days of 2022. A few went for $1 million more than their asking price. And as of February, 6 million houses were valued at more than $1 million each. That’s 8.2 percent of all houses in the country!
It’s not nearly a billion, but it’s still “real money” to most people.
On the flip side, according to estimates from LendingTree, more than 575,000 Americans are considered homeless. And nearly half – some 280,000 – are in just three states: California, Florida and New York.
Realizing, perhaps, that the market may be turning because of higher loan costs, homeowners are finally starting to place “For Sale” signs in their front yards. But almost as soon as houses are listed, they are being gobbled up by anxious buyers.
For example, in northern Virginia, where new listings were up nearly 39 percent in February, more than half were sold within 10 days. Looking at it another way, there were 2.27 pending contracts per listing, up from 1.9 in January and 1.4 in February 2021.
“Long gone are the days when buyers could go home and ‘sleep on it,’” said Reggie Copeland, president of the local Realtor association.
Don’t Look to the Zombies for Relief
Zombies are believed to exist somewhere between death and the afterlife. And so are some houses.
Lew Sichelman
Whereas people-zombies aren’t really dead, but also aren’t really alive, “zombie houses” are those that have been vacated by their owners but have yet to be taken over by their lenders. They exist, but without any real life in them.
Zombie houses aren’t the same as vacant houses. There are more than 16 million of the latter, according to the Census Bureau, while RealtyTrac counts 13.5 million. But that doesn’t mean they are the answer to the woefully under-supplied housing market. Some vacant homes are empty because they are uninhabitable.
The Census Bureau also counts as “vacant” unoccupied units for rent or for sale; units rented or sold, but not yet occupied; vacation places used seasonally or occasionally; and houses used by migrant and other seasonal workers, especially during the crop or logging seasons. Even timeshares are in the mix.
According to the latest report from ATTOM Data Solutions, nearly 230,000 residential properties were in the foreclosure process nationwide. And the numbers are rising. But only 7,500 or so are vacant – a slight decline from previous counts.
Even with foreclosures rising, RealtyTrac’s Rick Sharga said a big jump in zombie properties is not likely.
“Zombie status is most likely during a long, protracted foreclosure process,” he said. “But with $23 trillion in homeowner equity, and demand outstripping supply, most distressed borrowers should be able to sell their home at a profit before the process drags on.”
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
