Home Buyers May Face Sticker Shock This Spring
“People quite frankly came out and got sticker shock … they picked up the price sheet and saw, ‘Wow, that’s way more than I thought’ because home prices had gone up so much in 2013,” Brad Hunter, chief economist at Metrostudy, told CNBC.
Existing-home prices were up 9.1 percent in February above year ago levels, according to the National Association of REALTORS®. Meanwhile, incomes are up just 2.1 percent from a year ago, according to the Bureau of Labor Statistics.
Home builders also have been raising their prices over the past year. For example, D.R. Horton, one of the nation’s largest builders, announced earlier this year that it planned to raise home prices in some of its markets this spring. In January, the builder said the average price of its homes under contract was up 10 percent in the past year.
Buyers also are facing rising mortgage rates and tighter credit conditions.
Still, while prices have been on the rise, home prices are well off their peak from the housing boom in 2006, housing experts note. Inventories remain constrained in many markets as some home owners wait for higher home prices before they list.
“I think buyers are extremely fickle, and what’s weird about it is the market is in a funk on both sides, it’s like trying to get pandas to mate at the zoo,” Glenn Kelman, CEO of Redfin, told CNBC. “Sellers feel like, ‘I can rent it out. I’ve got a very low mortgage rate on this place, and when I sell the house I’m also giving up a 30-year mortgage on it at 3.5 percent.’”