Home Prices Rise Again In April: What to Expect If You’re Still Waiting to Buy

Home Prices Rise Again In April: What to Expect If You're Still Waiting to Buy

This week we received the April home price reports from CoreLogic, Black Knight, and Zillow; and just as we anticipated, they show that continued low supply and slightly higher demand led to another spike in home prices this spring.


According to CoreLogic's U.S. Home Price Insights, prices increased by 1.2% in April 2023 on a month-over-month basis. Black Knight's Mortgage Monitor data shows a 0.5% increase, and Zillow reports an astounding 1.4% jump.


If we annualize the average of these numbers - meaning if these trends continue at the same rate through the end of the year - we would see almost 12% appreciation in 2023.


While that level of appreciation is highly unlikely, these are still big numbers - especially considering that a lot of people are not buying homes because they don’t want to give up their low interest rate, so demand is not nearly as high as it could be.


According to Black Knight:


Price strengthening this spring has erased more than 60% of the declines seen late last year at the national level, and at the current rate of growth would fully erase those corrections by mid-2023.


The chart below is from MBS Highway. These numbers make it clear that the housing market reached its trough at the beginning of 2023 and appreciation will continue at a sustained level as we move throughout the year.

Blog graphic

CoreLogic forecasts we will see another increase of 0.9% when they release their data for May 2023, and Barry Habib and the team at MBS Highway anticipate we will see roughly 5% total appreciation in 2023. If these trends continue, it seems like those predictions will come true.


Inventory is Still Low

The reason home prices continue to rise is because there are still not enough homes on the market. According to Black Knight's report, inventory has declined in 95% of the major U.S. housing markets since the start of 2023.


Realtor.com’s May housing data draws the same conclusion. While we are still seeing a small amount of month-over-month growth in active listings (a spike happens every year around this time), the growth rate is declining as sellers continue to list fewer homes than last year and buyers compete over the remaining affordable homes for sale.

Blog graphic

While inventory has increased since last year, it is still drastically lower than the start of the pandemic.


When Will Affordability Improve?

The main driver of this shortage continues to be low affordability because of higher interest rates. Nobody wants to sacrifice their low mortgage rate, so they are staying put and hoping for rates to come down.


And we still anticipate they will. Rates did spike in recent weeks amid the U.S. debt ceiling standoff, but have started to trend back down since a deal was made. And if the Federal Reserve follows through with their recent comments that they may 'skip' another rate hike this month, we could see them come down even more.


Eventually, all of this economic turmoil will result in a recession. Many anticipate we may already be in one. Europe appears to officially be in a recession, and U.S. jobless claims recently hit a 20-month high suggesting that the labor market is softening as interest rate hikes stifle business growth.

Historically, mortgage rates increase in the months leading up to a recession, but they always fall when a recession sets in. We're well on our way, and we still anticipate rates to land somewhere around 5.5% by the end of this year.

Should You Still Wait to Buy?

Supply and demand economics are working to keep home prices steady, and there are still plenty of people out there who want to buy homes even in the face of higher rates. The problem is the majority of homeowners today have an interest rate on their mortgage below 4%. Many homeowners are opting to stay put instead of moving to another home with a higher borrowing cost.


Rates will come down eventually, and there will be a surge of buyers looking for homes when they do. When that happens, it will be more difficult for you to find a home that meets all your needs and to negotiate on price and other concessions.


If you can afford it, we recommend starting the process now and taking advantage of the low competition. You will start benefitting from appreciation right away, and you will always have the opportunity to refinance and lower your payment when rates drop.

Creating an Equity Transition Plan

If you're worried about being able to afford a new mortgage payment in this market, we recommend working with a mortgage advisor to create what's called an equity transition plan.


The truth is the reason most people feel stuck in their home today is not because of their low interest rate – it's because they forget to consider their global household debt payment and they don’t create a plan to use their current home equity wisely and effectively.


It's a common misconception that when selling your home and buying a new one, ALL your existing equity should be used as the down payment so your new mortgage can be as low as possible. But what if instead of making a large down payment, you used some of your equity to eliminate all your other debt (car loans, credit cards, etc.) and reduce your GLOBAL household debt payment?


Creating an equity transition plan and finding a way to lower your global household debt payment is so crucial in this market. If you have significant home equity, putting less money down on your new home and instead paying off your other debt can make buying a home much more affordable – even with a higher interest rate.


Check out our recent blog post to see one of these plans in action. If you'd like to see specific options for how you can use your equity to lower your next mortgage payment, fill out the form below to request your own equity transition plan.

Overcoming Housing Market Fears

By Luminate Marketing Team • 06 May, 2024
The recent headlines broadcasting mortgage rates surpassing the 7% mark have instilled a sense of apprehension among potential homebuyers. In a market perceived as increasingly unaffordable, it's easy to feel discouraged. However, with the right mortgage strategy, you can transform this challenging market into an opportunity.  Historical Perspective on Mortgage Rates While current rates hovering around 7% seem daunting, a historical review reveals a broader context. During the early 1980s, mortgage rates soared to 18% and even in more stable times, rates have frequently fluctuated above 10%. This historical perspective is vital because it demonstrates that while today’s rates are higher than in recent years, they remain within a historical long-term normal rate range.

Why Cash Buyers Dominate the 2024 Real Estate Market

By Luminate Marketing Team • 28 Apr, 2024
The 2024 real estate market is ROUGH. Losing to multiple offers, emotional frustration, and the stress from competing offers is discouraging to say the least. Notably 32% of home sales are being clinched by all-cash buyers, the strategic advantage of wielding cash has never been clearer. This resurgence in all-cash transactions underscores a market where immediacy and certainty reign supreme, especially as home prices continue their upward trajectory against a backdrop of scarce inventory. Within this context, it’s prudent to evaluate every option that can help you sell an existing home and get your offer accepted on a new home. Navigating the Alternatives iBuyers : These entities provide a quick, straightforward selling process for homeowners looking to bypass the traditional market. By making instant cash offers, iBuyers appeal to those seeking immediacy and convenience. However, this often comes at a cost, including service fees and potentially lower offer prices, as the iBuyer model is designed for speed over maximizing seller profits. Power Buyers : Power buyer programs cater to homeowners wishing to purchase their next home before selling their current one. They typically employ financial tools like bridge loans to facilitate this process, offering a solution to the timing mismatch between buying and selling. While this approach adds flexibility, it can also introduce complexity and additional costs into the transaction. But it's important to remember that not all of the innovative iBuyer and Power Buyer programs are the same. It's all about finding the right fit for your situation. Luminate's Unique Approach At Luminate Home Loans, we've carved out our own niche in the market. We offer a program that turns our clients into cash buyers. This isn't just a minor perk; it's a game-changer. Being a cash buyer makes your offer far more appealing to sellers, cutting through the delays that often come with loan approvals. Our approach is designed with you, the homeowner, in mind. We give you the immediate advantage of a cash offer, coupled with the flexibility to choose the best financing option for you down the line. It's about giving you control and confidence in your home-buying journey. If you're navigating the complexities of buying and selling homes, our program might just be the solution you've been searching for. We focus on ensuring our processes are straightforward, your personal information is secure, and the transition to your new home is as smooth as possible. With Luminate, you're not just moving houses. You're stepping into a well-thought-out system designed to get you into your dream home with ease and certainty. If this sounds like what you need, we're here to make it happen.

Understanding Economic Shifts: How Rising Fast Food Prices Intersect with the Housing Market

By Luminate Marketing Team • 21 Apr, 2024
Have you been noticing the prices of fast food and other products going up? Well, you're not alone. Across the country, families are feeling the financial pain of previously low-priced items suddenly costing double (or triple!) what they’re used to. For example, a lunch for two in California at a fast food chain can easily be $40 nowadays, which is a big jump for places that tout “cheap fast food.” But why exactly is this happening, and what does it have to do with you buying a home? Keep reading for more insights. Why Are Prices Going Up? Starting in April of 2024, the minimum wage for fast-food and healthcare facility employees in California was increased. As a result, their wages went from $16/hour to $20/hour in order to provide better wages and living conditions for these workers. This rise in minimum wage, while much needed for the economy, is happening all across the nation. And when businesses have to pay their employees more, they often raise their prices to cover the costs. Which, unfortunately, means the burger and fries you love might cost more now. What Does This Have to Do with Housing? In recent news, you may have heard of President Biden’s housing plan to help first-time homebuyers and to reduce housing costs. This plan would give money to first-time homebuyers and some families looking to sell their homes. But just like with the fast-food industry, the effects can vary. In some places like California, where not enough houses are available, making homes more affordable might not be enough. In other places, it might help a bit more. So, What's the Best Move for Homebuyers? If you're thinking about buying a home in the near future, it's good to know about these changes and plans. By staying informed and working with an expert lender, you can take advantage of any changes as soon as they happen. But even though extra money in the economy sounds great, it's important to look at the whole picture, like how many houses are available and how much they cost. If more homes become available and the costs of borrowing money for a home go down, this could be a better outcome for buyers vs money that is thrown into the economy. Conclusion Understanding these changes can help you make better, informed choices about your financial future. Whether you're saving up for a big purchase or just deciding where to grab lunch, let us help you save money where it counts! Reach out to us today so we can help you navigate your home-buying journey without having to skip out on the fries.
Share by: