News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
A House of a Different Color
Patrick Mai / Metrostudy / April 23, 2013
3 Extraordinary Trends Occurring in Today’s Housing Market
Since the beginning of the recovery, the dynamics of the housing market have shifted drastically. Inventory of new single family homes, recently considered to be grossly oversupplied, has thinned out to historically low levels (below equilibrium in many markets). Listings on the resale market have also evaporated; now sellers, instead of buyers, have the upper hand at the negotiating table. Also, median home prices are on the rise as a result of supply constraints, a diminished volume of distressed sales, and renewed demand for single family homes. The relatively rapid turnaround of the broader housing market in the United States has created a few unique market conditions and trends which are not usually observed. This post will discuss three such trends and conditions currently present in the housing market: unprecedented affordability, hip pocket sales, and a surge in single-family rentals.
One of the most unusual conditions visible in today’s housing market is the high level of affordability that today’s home buyers are experiencing. As a result of historically low mortgage interest rates, today’s homebuyers can afford a lot more house than they would have been able to in previous decades. As a rule of thumb, for every 1% decrease in mortgage interest rates, the amount of a loan that a borrower will be approved for rises by roughly 10%. According to a piece published by Forbes on April 16, today’s homeowners are spending relatively less of their income on housing payments. How much less? As it turns out, a lot less.