The sharp slowdown in the housing market has come as no surprise to most observers. A steep imbalance between supply and demand, overheating prices and rising mortgage rates, and limited offerings of homes to buy meant it was only a matter of time before a slowdown took place.
The more important question now is: What kind of an impact will this hiatus have on local markets?
There are some clues — and great observations — in the monthly survey of real-estate agents produced by Credit Suisse. In August, its national buyer traffic index declined 4 points compared with July, and was 1 point below the long-term average for August.
August is generally a slow month for house hunting, but in nearly every metro area, surveyed agents spoke of a more profound slowdown than normal. There were several specific issues affecting local areas: the “red tide” of algae in multiple Florida metros, wildfires in Portland and in Sacramento, and emerging-market financial volatility that took foreign buyers out of the Miami market.
But the most enduring trend was buyer fatigue, a theme that was echoed repeatedly even as several agents noted that home builders are increasingly offering more supply at entry-level price points. As in past such surveys, there were multiple references to buyers moving further out into the periphery, and to the down payment being an obstacle.
The following is a selection of comments from real-estate agents in most of the metro areas surveyed by Credit Suisse.CityCommentsAtlanta“Higher interest rates and a lack of buyer motivation.” “Higher prices reducing the number of qualified buyers, but pent-up demand is compensating.”Austin“Jobs continue to drive new citizens to our MSA.” “Incoming out-of-state buyers and move-up buyers are keeping a high level of pressure on the lower-priced homes.”Boston“Anxiety as summer closes and buyers look to be settled before snow falls.” “Frustrated spring buyers returning to the market.” “Student loans remain a barrier for younger buyers.”Chicago“Excess of housing supply at the luxury segment.” “Fatigued entry-level buyers tired of losing out on multiple offers.”Denver“Seeing more inventory hit the market – which has encouraged some buyers.” “Builders trying to provide the missing entry-level product.”Fort Myers“Builders offering incentives for buyers to move.”Houston“Affordability is forcing many entry-level buyers to purchase further out.” “First-time buyers leaning more toward new construction.” “Buyers cautious due to the stigma of Hurricane Harvey and purchasing previously flooded homes.”Los Angeles“Affordability has forced first-time buyers out of the market with some relocating to states like Texas, Nevada and Arizona.” “Slight trend toward mobile or manufactured homes.” “Sellers asking for unrealistic prices.”Miami“Entry-level buyers need two incomes to qualify.” “Abundant inventory given emerging markets crises.”Minneapolis“Spring market craziness frustrated some buyers this year.” “Multiple offers on the few listed entry-level homes.”Orlando“New developments being built at affordable prices drawing more buyers who want quicker move-ins.” “Sellers choosing cash buyers over FHA, USDA and VA financing.”Phoenix“Many buyers relocating from California.” “New industries entering the MSA and attractive prospective buyers.” “Entry-level buyers having a hard time saving for a down payment with rents at an all-time high.”Sacramento“San Francisco Bay Area buyers moving here for retirement.” “Buyers want move-in ready with upgrades but are not prepared to pay the price for it.” “Entry-level having to purchase in dicier neighborhoods.”San Diego“Buyers sitting on the sidelines.”San Francisco“Buyer burnout from rising prices.”Seattle“Prices have leveled out tremendously, with more price reductions in August.” “Continued influx of employees for Amazon, Google and Microsoft.”Washington, D.C.“Buyers looking more before purchasing than in the spring.” “First-time financing is a door opener for buyers.”
Source: Housing Trends Feed