The New Normal – Tight Inventory and Higher Rates

CoreLogic reports 12 consecutive months of annual home price increases. The home price increases are only further complicated by the rising mortgage rates that have crossed the 5% line. Except for a few days in 2018, mortgage rates have been below the 5% benchmark since 2011. CoreLogic reported February home prices actually increased by 20% since February 2021.

Mortgage applications fell dramatically with refinance applications down 62% from the same period in 2021. The refinance share of total mortgage applications fell from 51% a year ago to 38.3% in 2022. The first-time home buyers continue to face an uphill battle whether due to the inventory shortage, the influx of buyer demand and now the higher mortgage rates.

According to the Mortgage Bankers Association, mortgage demand fell by over 6% from the prior week and 41% from the same period in 2021.

Wall Street 
Notwithstanding, Wall Street, in many cases, has bought up many mid-range homes in attractive regions throughout the country depleting available inventory especially for first-time buyers. Wall Street saw a good investment by stocking-up on single-family homes that they could rent over the last three years.

CoreLogic has also reported that institutional investment purchases of single-family homes, including such of industry’s largest players including Blackrock, are pulling back on their investment dollars into the real estate space.

According to the most recent CoreLogic report, the share of homes purchased by investors fell in November from a high of 26.9% in October and leveled off at 21.4% in December, possibly forecasting that investment activity could be returning to pre-2021 levels. 

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

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