Is Now the Time to Buy a Home or Condo?
Home prices are very high compared to the average American salary. Is Now the Time to Buy a Home for the First Time? In the early 2000s, home prices skyrocketed, and many people thought they could never buy. One reason was due to overuse of interest-only predatory home loans. Later the market crashed when the loans matured and crashed. Then followed the 2007 recession.
In 1987 home prices went way up in most major areas of the United States, and many owners sold to ride the wave into a new and expensive homes. Later came the combination of home foreclosures and job losses, leading to the horrendous recession of 2007-2008.
In 2023 home prices are high and have been high for a while, partly due to the low-interest rates in the past. The interest rates were kept really low to increase home buying from the 2008 recession. Then it appeared to stay low for too long. Prices skyrocketed due to low-interest rate demand. According to the Consumer Financial Protection Bureau, interest rates in California for a 30-year fixed conventional loan runs between 6.% and 7.8% in 2023.
Between 2010 and 2013, the home-buying interest rates averaged 5%. Those who look to buy a home for the first time, with good credit and a substantial down payment, will get a lower interest rate. The problem in the high-priced areas is they may be buying an overpriced property. When you buy a home for the first time, there are major incentives.
From Apartments to Expensive Condos
Now the trend is to convert apartments to condos in major cities. This has taken renting out of reach for renters in some big cities. Because of this, some renters went from an apartment to the street. No longer able to afford any of the few apartments left to rent.
Up to 2007, housing prices went up continuously. From 1963 to 2007, there was mostly an increase in homes held long-term. (federal reserve bank of St. Louis). Then in 2008 came a huge financial crisis.
The recession caused many foreclosures due to interest-only loans, job losses, and possibly the Iraq war. Then in 2013, home prices climbed as they did before the crisis. Home prices flattened until 2018, then climbed a little around 2019. Home prices went down in 2020, then started to climb again. That is most likely because of the pandemic and business closures.
In 2023 home prices are slightly down in some areas, but the supply of homes for sale is low. The low supply seems to be keeping home prices up. Homeowners don’t seem to want to move with the higher interest rates. Condos that were previous apartments are usually the least expensive in the area. The Condo is an attractive buy for those who want to buy a home for the first time. But condos come with a lot of problems and high HOA fees. You must know what HOA fees cover.
Real Estate Prices and Location
There are a lot of factors to consider when it comes to real estate prices. The location is the key. Real estate on both coasts and highly populated areas is the most expensive and has climbed a lot.
Factors that create high real estate costs are when large companies that pay high salaries are in the area. Gentrification can take prices up drastically also. Remote workers moving to lower-cost areas, as in the pandemic, can actually drive prices up in those areas. Overcrowded areas with a low supply of homes can drive up prices.
Is Now the Time to Buy a Home or Condo, With Prices Still High?
Different states and even cities next to each other can have drastically different home pricing. If a large company closes and several residents try to sell homes at the same time, prices could go down due to a lack of buyer interest. Real estate in the Northeast and West Coast has higher priced homes than in the South and Midwest.
Since the pandemic low of 2020, home prices have rebounded. Mainly due to reasonable mortgage rates and a shortage of homes. During the pandemic, a decrease in lumber and labor created a shortage of homes which increased prices. Another issue is that homes are getting larger, and appliances and fixtures are getting fancier. Both of these drive prices higher. In 1950 the average home size was 983 square feet, but by 2015 it was 2,750 square feet. (Federal Reserve Bank of St. Louis).
Apartments Turned Into Condos
When surfing Zillow for a one-bedroom, one-bathroom condo in San Diego, there is a surprise. In the coastal towns of California, many of the apartments have been turned into condos. This is happening all over California. Type in any major city, and there will be buildings that look like apartments because they were originally built as apartments. When on Zillow, type in home sales near me for pricing and available homes that fit your budget.
The conversion to condos has been recent. It is easy for me to identify the conversions because, growing up in southern California, I knew many of these buildings as apartments. What does this do for home prices? For one thing, the apartments are no longer rentals as apartments. Another is that condo prices are high because of the scarcity of homes. The HOA fees are also high in these condos ranging from $350 to $500 a month.
The one-bedroom, one-bathroom condos in a middle-class area is going from $350,000 to $400,000. This is an attractive price for first-time home buyers with a much higher-than-average salary.
Remote Workers In Reasonably Priced Areas
Many people fled overcrowded and expensive cities when the pandemic hit, and they were able to work from home. Home for many was a lessor expensive city and sometimes state. This factor drove up prices in other states that were previously affordable. Currently, according to WFH Research, about 30% of workers are still remote workers, at least part-time, and affecting home prices in previously inexpensive areas.
Massive Research is In Order Before Purchasing a U.S. Home - MsFinancialSavvy
People Staying Put Is Currently Leaving a Low Supply of Homes
Because the government has raised the interest rates, partly to put a halt to home rising home prices, many are not moving. So, while home prices have not gone down very much, the inventory is low, so homes are still selling at a brisk rate. Some, in larger, more popular places, are even getting prices bid up. Type in the term, home sales near me, in zilliow.com and realtor.com to find out the options in your area.
New Home Sales of 2023
According to Census.gov and the Department of Housing and Urban Development, sales of a new single-family home in March 2023 were 683,000. This is 9.6% above the February rate of 623,000 and below the March 2022 estimate of 707,000 homes.
Sales Price of Average U.S. Homes
The median price of new homes sold has decreased but is still high; as of March 2023, it was $449.000. The price of the average home was $562,000
The median sales price of new houses sold in March 2023 was $449,800. The average sales price was $562,400. This is crucial information when you buy a home for the first time. Prices are high, but they are down and may go down further in the next five years, depending on the economy. As for the inventory of new houses for sale, the end of March was 432,00. This is a supply of 7.6 months. (Census.gov) This is not a large supply
Are Remote Workers Driving Home Prices Higher?
There are many factors that are keeping home prices high. While prices have come down a bit from highs, some areas still have priced middle-class workers out of the home-buying market. When you buy a home for the first time, special programs will bring down costs to buy and interest rates.
To find out how much homes are going for in an area, go to Zillow.com or realtor.com and type in, home sales near me. This will show a number of homes in your area with the home statistics placed in the checklist, such as bedrooms and bathrooms.
Remote workers during the pandemic were one reason homes went up in value in many places. But, remote workers have decreased, and there are many other factors that keep home prices high in populated areas. Some reasons are interest rates for home-buying is high for some but low for others. Many don’t want to sell because of the interest rates, and therefore the inventory is low.
Apartments converted to condos are another reason condos are high and may be one reason for homelessness in populated areas. When you buy a home for the first time, as a condo, know what the HOA fees cover. Those fees can be tricky and over costly.