Headlines

What’s new in the world of Real Estate

Happy Holidays!

• Home prices continue to increase

• Existing home sales rose for the first time in six months

• The average house is the least affordable it has ever been

• “Super” luxury home sales declined in 2023

Plus: Some real-life gingerbread houses, modular homebuilding and more.

Listing of the week: A Hobbit house in Oregon…with an actual house in the back.

Market Updates

U.S. home prices hit another all-time high in October. The S&P/Case Shiller Home Price Index rose for the ninth straight month, growing 0.6% in October and 4.8% year-over-year. Detroit, San Diego and New York City saw the biggest year-over-year gains, while Portland was the only top-20 market that saw a loss. Meanwhile, the FHFA House Price Index rose by 0.3% in October and 6.3% year-over-year. The price gains are largely the result of a continuing lack of supply, as the recently lowered mortgage rates won’t be reflected in the data until next month.

Existing-home sales rose by 0.8% in November, but still fell 7.3% year-over-year. Still, the increase broke a 5-month streak of decreases and represents the first sign that the housing market is thawing after a recent dip in mortgage rates. First-time buyers represented 31% of the total, up from 28% in October. The median price rose by 4% year-over-year and according to the National Association of Realtors, “[o]nly a dramatic rise in supply will dampen price appreciation”.

Only 15.5% of homes for sale in 2023 were affordable for the average American household. This is the lowest number on record, and represents a decline from the 21% last year and a sharp decline from 39% in 2021. Redfin defines “affordable” as a listing with a mortgage payment less than 30% of the local median household income. The decline is largely due to mortgage rates rising while housing prices increased, but affordability is expected to improve in 2024 as rates are predicted to fall which could cause housing supply to rebound as well.

There were only 29 properties that sold for above $50 million this year. This represents a drop of 35% from 2022 and 44% from 2021, which saw a record 52 “super-luxury” properties sell that year. While certainly a small sample size and a market that is a tiny slice of the overall real estate market, it is an interesting bellwether for the current market sentiment. As the stock market rises and interest rates fall, there could be a rebound in store in 2024.