SANTA CLARA, Calif., Jan. 19, 2017 /PRNewswire/ -- New data
from realtor.com®, a leading online real estate destination
operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc., suggests that the share of first-time buyers
planning to buy in spring 2017 fell sharply when mortgage rates began to rise at the end of last year, dropping by as much as 10
percent since last October. At the same time, record low inventory levels, higher prices and heavy buyer competition is creating
more urgency for active home buyers.
"Last fall, we saw a large jump in the number of first timers planning home purchases, which was very encouraging because
their market share is still well below pre-recession levels," said Jonathan Smoke, chief economist
for realtor.com®. "But, as evidenced by their decline in share, first-time buyers are really dependent on financing and
affordability is one of their largest barriers to home ownership. This number could continue to decline with anticipated
increases in interest rates and home prices."
According to realtor.com®'s January survey of active home buyers, 44 percent of buyers planning to buy in spring 2017 are
first-time home buyers. This has dropped significantly since the survey was conducted in October, when 55 percent of buyers of
planning a spring purchase indicated they were looking for their first home.
The average 30-year conforming rate rose to more than 4.2 percent by the end of December 2016
from 3.4 percent at the end of September 2016. With average rates today about half a percentage
point higher than they were in 2016, a median-priced home financed with 20 percent down would cost an additional $720 per year in added interest. That equals more than 1 percent of the median household's income.
Survey data collected by realtor.com® found that first-time buyers were nearly five times more likely than repeat buyers to
say they faced challenges qualifying for a mortgage, with affordability ranking highly among first-time buyer concerns.
First-time buyers comprised 32 percent of all buyers in November, according to the National Association of Realtors®.
"The rise in rates is associated with an anticipation of stronger economic and wage growth, both of which favor buyers," added
Smoke. "At the same time, higher rates make qualifying for a mortgage and finding affordable inventory more challenging. The
decline in the share of first-time buyers since October suggests that the move up in rates is discouraging new home buyers
already."
To date, rising interest rates appear to be having the opposite impact on repeat home buyers. Even with the current increases,
interest rates remain historically low, and the movement in rates hasn't yet tipped overall buyer demand down. It has actually
sparked demand from experienced buyers trying to close before rates increase further, as evidenced by increased realtor.com®
listings views and decreased inventory. In the short term, the rate movement seems to have encouraged rather than dampened
overall demand.
In addition to likely additional mortgage rate increases, prospective buyers should be aware of the following aspects of the
housing market
realtor.com® expects to see at play over the coming year.
Other Significant Challenges for Home Buyers in 2017
- There Aren't Enough Homes for Sale.
Even after 51 straight months of a below-normal supply of homes for sale, 2017 is expected to be even more
challenging. Active inventory in December on realtor.com® was down 11 percent compared to December
2015. As a result, the year has started with the lowest inventory of homes for sale at least since the recession, and
possibly in decades. Inventory was a challenge all year but a stronger offseason in the fall depleted the available homes for
sale even more than is typical.
- Prices Remain at Record Highs.
Asking prices usually decrease in the fall, but this year the median list price in December, was the same as in July
at $250,000. That represents a record price for December and a year over year gain of 9 percent,
the highest monthly year-over-year gain in 2016.
- Rising Rates Have Made Demand Even More Intense.
With fewer homes on the market, average listing views were up 40 to 80 percent in the last three weeks of December,
compared to the same time in 2015. Multiple potential buyers seem to be interested in virtually every home on the market even
though we are in the slowest time of the year for sales.
Forward-Looking Statements
This document contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's views and assumptions regarding future events and business performance as of
the time the statements are made. Actual results may differ materially from these expectations due to changes in global economic,
business, competitive market and regulatory and other factors. More detailed information about these and other factors that could
affect future results is contained in News Corp's filings with the Securities and Exchange Commission. The "forward-looking
statements" included in this document are made only as of the date of this document and we do not have any obligation to publicly
update any "forward-looking statements" to reflect subsequent events or circumstances, except as required by law.
About realtor.com®
Realtor.com® is the trusted resource for home buyers, sellers and dreamers, offering the most comprehensive source of
for-sale properties, among competing national sites, and the information, tools and professional expertise to help people move
confidently through every step of their home journey. It pioneered the world of digital real estate 20 years ago, and today helps
make all things home simple, efficient and enjoyable. Realtor.com® is operated by News Corp [NASDAQ: NWS, NWSA] [ASX: NWS, NWSLV]
subsidiary Move, Inc. under a perpetual license from the National Association of REALTORS®. For more information, visit
realtor.com®.
Media Contact:
Realtor.com®
Lexie Puckett Holbert – lexie.puckett@move.com
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SOURCE realtor.com