Home prices are finally starting to fall
In a good sign for homebuyers, the share of available listings that saw a price cut jumped to 18.9% in July – up 3.4% from the same time last year, and the highest level in two years, according to a new report published by Realtor.com. Price cuts are atypical in July, which is usually a peak time for home sales. But this year is different, because sellers are trying to lure back lukewarm buyers who are facing both high costs and steep interest rates.
Despite their combined six-figure income, the homeownership dream has soured for young Americans Laura and Samuel Graves, who are left with little choice but to build their family in a suburban Portland apartment as they patiently search for a home that suits their budget.
“We refuse to become ‘house-poor’ and, like many others, are choosing to sit it out until the housing market is reasonable again,” Laura, who works as a financial analyst, told Business Insider in an article published Sunday.
Combined with her husband’s salary as an electrician, the couple pull in approximately $250,000 a year. According to the report, they’re hoping to keep their monthly mortgage payment around $3,000, but most homes they’re eyeing exceed that by approximately $2,000 on average. They’ve also claimed to stifle retirement savings and childcare costs to help their situation.
HOME PRICES ARE FINALLY STARTING TO FALL – AND THEY DROPPED THE MOST IN THESE 3 CITIES
Add this millennial couple to the massive number who refuse to become financially burdened by housing-related costs in today’s market and have opted for alternative living situations to mitigate those expenses.
In Laura and Samuel’s case, they are setting aside only 3% of their income for retirement, instead of the ideal 15% and, instead of sending their children to full-time summer camp, have opted for a part-time camp instead, the report stated.
Portland, Oregon skyline. (Photo by: Dennis Frates/Avalon/Universal Images Group via Getty Images)
With prices and interest rates high, the idea of saving enough to move into a dream home seems far away for the couple.
“Our children have begun talking about how they want a house so badly and their own rooms,” Laura told the outlet. “We’ll never get these years back. By the time we buy, we won’t even need room for a play set.”
But there’s some positive news on the horizon for wouold-be homebuyers. A Realtor.com report published earlier this month found that home prices dipped in July as sellers tried to lure in would-be buyers, with the median reaching $439,950 from $445,000 the month prior.
“First, rates remain higher than expected, which means there is less buyer activity,” Ralph McLaughlin, Realtor.com senior economist, said. “Second, the prospect of lower mortgage rates coming this fall may have induced some buyers to wait. This combo has led sellers to lower their prices in order to attract more buyers.”
A Zillow estimate found that, in the Portland area where the Graves family is browsing for a home, the average home value is $541,000 and $642,000 in the Wilsonville suburb where they currently reside, Business Insider said.
But waiting out the market isn’t the only sacrifice buyers have been forced to make.
Some social media trends indicate millennials have made sacrifices in other ways, even going as far as living in cost-effective vans to save up for their homebuying dream.
Cost has become a significant enough factor to make approximately one in five prospective homebuyers consider shopping around in a less safe neighborhood to find a more affordable home, according to Redfin.
Other young adults have had to turn to help from parents to help cover the cost of a down payment on a home, or have even opted to live with their parents longer to help ease some of their financial burden and put more money aside for the future.
FOX Business’ Kendall Tietz and Megan Henney contributed to this report. Read more of this story from FOX Business.
