The single-family home sector is showing signs of a slow down this winter, despite continued investor optimism.
Share prices of Zillow and Redfin increased 124 percent this year, the Wall Street Journal reported. Zillow forecasted gains in the fourth quarter in both its agent advertising and home-flipping businesses.
Those rising share prices were bolstered by city-dwellers who — faced with lockdowns, business closures and the ability to work remotely — considered moving to more affordable suburbs. Some software companies, however, have since announced they will consider pay cuts for those who move out of dense urban areas where their offices are headquartered, to bring compensation in line with local labor costs.
Lower compensation, coupled with rising home prices — which had the biggest year-over-year increase since 2012, according to Redfin — may compel buyers to hold out for a better deal. Sellers, too, are considering pumping the brakes, according to a Zillow survey, which found that 40 percent of sellers believe they will get a better price if they wait.
There are other signs the home-buying frenzy may be tapering off.
Visits to Redfin and Zillow have waned since peaking in August, according to SimilarWeb. In early November, the rate of mortgage refinancings grew as homeowners took advantage of historically low interest rates. A Mortgage Bankers Association survey showed the volume of homebuyers applying for new mortgages fell by 1 percent in the first week of October, compared to the week before. The index tracking those applications decreased each week in September.
Nationally, buyers with lower credit find it more difficult to secure bank financing for homes, so even those considering buying homes could find themselves locked out. An index tracking available housing credit is down 35 percent year-over-year.
[WSJ] — Georgia Kromrei
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