The White House recently announced additional measures to help struggling homeowners avoid foreclosure as they exit forbearance, including loan modifications and payment reductions. Borrowers with federally backed mortgages can lock in lower interest rates and extend the length of their mortgages. For borrowers who can’t resume their monthly mortgage, HUD will offer lenders the ability to provide all eligible borrowers with a 25% principal and interest reduction.
In July, the median price of a detached home in the Valley rose to $599,000, which is 30.2% higher than last July. The median price for attached homes in the Valley was $383,250, up 37.3% year over year. Year over year gains in city median prices for detached homes range from 42.5% for Indian Wells to 10.2% in the city of Coachella. Four cities have price gains for detached homes over 30% – Indian Wells, Rancho Mirage, Desert Hot Springs and Indio. Four cities also have gains over 30% for attached homes – Indian Wells, La Quinta, Rancho Mirage and Palm Springs.
The median value for “days in the market” in the Coachella Valley has dropped to just 25 days. This compares to 56 days one year ago. We expect this metric to continue lower but at a more moderate rate. The “months of sales” ratio at the end of July was .7 months, up slightly from last month, which was an all time low. It is difficult to imagine any downward movement in home prices at the current time, with demand so heavily weighted over supply, in favor of home sellers.
The National Association of REALTORS® reported inventory of homes for sale nationwide rose slightly in June as more sellers list their homes, hoping to take advantage of record-high sales prices across the country. Even with renewed home seller interest, inventory overall remains 18.8% lower than a year ago, according to NAR. Meanwhile, the foreclosure moratorium on federally backed mortgages, initiated at the beginning of the COVID-1 pandemic, expired on July 31. At present, about 1.75 million Americans remain in forbearance, which has decreased more than 50% from its peak during the pandemic.
In July, rents nationally rose 7% year over year for one-bedroom apartments and 8.7% for two-bedroom apartments. Single-family rentals are also experiencing a surge in demand. Some markets are seeing more demand than others. In the spring of this year, New York City saw its rent applications double compared with 2020, San Francisco saw a 79% increase in prospective renters, and Seattle experienced a 55% jump, according to RentCafe, a rental listing website. Meanwhile Boston saw only a 5% gain, while rent applications rose 8% in Charlotte, North Carolina, and 9% in Portland, Oregon.
To offset losses from the Covid eviction moratorium, some landlords are raising rents on the properties they can, knowing that demand in the market will support the increases.
With rents continuing to rise across the country, renters should consider if now is the right time to buy. There are multiple benefits to buying sooner rather than later. As home prices rise, so does your down payment requirement. What was a 5% down payment on a house last year is much higher this year as home prices continue to tick up. Not only do you have to save for a down payment, but there are also closing costs and reserve money you’ll need in the bank, too.
Renters face increasing costs every year. When you purchase your home, your mortgage rate is locked in for 30 years, meaning your monthly payment stays the same over time. That gives you welcome peace of mind and predictability for many years ahead.