Redfin reports buyers can afford a more expensive home now that mortgage rates have dropped to 6.7%, down from nearly 8% in October
A homebuyer on a $3,000 monthly budget has gained nearly $40,000 in purchasing power since mortgage rates peaked this past fall, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. A $3,000 monthly budget will buy a $453,000 home with a 6.7% mortgage rate, roughly this week's average. That's compared to the $416,000 home the same buyer could have purchased in October with an average rate of 7.8%.
To look at affordability from another perspective, the monthly mortgage payment on the typical U.S. home, which costs roughly $363,000, is $2,545 with a 6.7% rate. The monthly payment was nearly $200 higher— $2,713— when rates were at 7.8%.
Homebuyers are getting some relief in 2024 as mortgage rates come down from the two-decade high they hit this past October. Weekly average rates dipped into the 6.6% range by the end of 2023, and ticked up slightly to 6.7% this week. While that’s double the record-low 3% rates buyers scored during the pandemic, Redfin agents report that buyers have come to terms with the 6% range— but they were more hesitant when they were approaching 8%.
“Bidding wars are picking up as mortgage rates decline and inventory stays low. I’ve seen a few homes get 15-plus offers recently, and one got more than 30,” said Shoshana Godwin, a Redfin Premier agent in Seattle. “Late last year, many listings sat on the market as buyers sat on the sidelines, hoping for rates to drop. Now, buyers are snapping up homes because even though rates haven’t plummeted, people are realizing that the longer they wait to buy a home, the more competition they’re likely to face.”
Mortgage rates likely to stay in the 6’s for the foreseeable future
Redfin economists predict mortgage rates will end the year lower than they started, but the path is likely to be bumpy. Redfin is keeping an eye on next week’s Fed meeting to provide more clues on how soon they will cut interest rates: It could be as soon as March, but it’s likely to be later. Mortgage rates should come down a little— but not a lot— when interest rates are cut.
“My advice to serious house hunters: Trying to time the market around mortgage rates is probably a waste of energy, as affordability is unlikely to change meaningfully in the next several months,” said Redfin Chief Economist Daryl Fairweather. “Instead, buyers should consider their own personal and financial circumstances: What matters most is whether the home meets your needs long term and whether you can afford it. Timing the market mattered in 2021, when we were in a golden window of record-low rates— but that window is closed.”
To view the full report please visit: https://www.redfin.com/news/purchasing-power-improves
I wanted to share a situation that took place this week with one of my clients, and I thought it might provide a good reminder to all of us that just because we said it, doesn’t mean people heard it! Often people will hear what they want to hear, not necessarily what you did say. This holds true when people want the answer they want and not what you said. Case in point, a client is a veteran and has used a VA loan before but is not using a VA loan this time because they don’t have enough eligibility to keep their current house with a VA loan already in place, and rent it, and buy the next primary residence.
This client was fixated on a VA loan and couldn’t get past it. The LO explained over the phone that they couldn’t use the VA loan but had other options that would work within the budget, but it wouldn’t be 100% financing and money would have to be brought to closing. The call was completed, and the client appeared to understand the situation (and had plenty of assets to make the deal happen) but the LO didn’t follow up the call with an email that documented that call and clearly explaining each point they had shared during that call.
Well, the client went to the internet and got bits and pieces of information that they tied together so they were convinced the LO had lied to them and was trying to scam them out of using a VA loan to buy this house. They then wrote a three-page letter to the referring real estate agent, denouncing the LO and their company! The agent then called the LO and the LO explained the entire story, which the agent was able to understand, but the damage was done. If the LO would have just put the reasons they discussed in an email and sent it to the client, the client would have had the actual reasons to search, instead of what they believed to be the case. It also would have been possible to copy the agent on that email and the agent would have understood the situation BEFORE the client blew it all up.
Situations happen. Communication is very important. Please be sure you always follow up with a call with an email, and an email with a call! It won’t solve every issue, but it will prevent a few!
Today we have initial and continuing jobless claims, GDP, & New Home Sales. Friday, we have PCE and Pending Home Sales.
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In years past, agility has been the cornerstone of business success, and it is something I frequently address in my teachings. The ability to react quickly to disruptions as they come is not a terrible thing, though while agility may have kept companies and executives at the top of their industry for many years, it is no longer enough.
Agility puts you in a position that is only useful after disruption has occurred. Essentially, you have no edge on the competition, no matter what that competition is. Crisis management and reacting to problems as they are hitting you is immensely stressful, as by the time they occur, you have already lost profits, customers, or operational efficiency.
In a time where Artificial Intelligence (AI) and massive technological transformations are happening at beyond-exponential rates, being reactionary and having a wait-and-see attitude will be what both allows your competition to surge ahead but also what proves to be a major setback in both your professional and personal life.
This month, I had the fortune to speak with Karen Ellenbecker, EIG founder and senior wealth advisor for the Ellenbecker Investment Group and a longtime friend of mine, on her podcast, MoneySense. I am extremely thankful that Karen invited me to join in the discussion about the technological revolution taking place and to share my insights on how to be an Anticipatory Leader in the face of current and future AI disruptions.
The ability to be agile is a good skill to have, but business leaders need an Anticipatory strategy in conjunction with it that allows them to pre-solve the real problems in each circumstance before they have the opportunity to disrupt. No longer is it advantageous to merely be a passive receiver of the future; you need to instead anticipate what is to come and be an active shaper of the future to create a positive one filled with opportunity.
The Future of Technology Is Now
One of the first questions Karen asked me in our discussion was to give my definition of AI. My definition is quite simple: revolution. Artificial Intelligence has been around for decades whether everyone realizes it or not, and I have based a large amount of my research on its implications and how it will impact business operations and the world. In the past, AI has been in an evolutionary state, moving forward exponentially. However, last year, we witnessed the technology take an unprecedented leap with the introduction of ChatGPT from OpenAI.
Just to refresh for those new to this AI application: ChatGPT is a generative language model that is changing the way we write content, create videos, code, and more. As the fastest-growing AI software in contemporary history with over 100 million users in the first two months, the software is changing the face of business and our personal lives at an unprecedented rate.
ChatGPT has become a major disruption to almost every industry, and many software companies are already trying to play catch-up. Microsoft released their own version called GPT-4, as well as Google, with their model, Bard.
Now that AI applications are moving at a beyond-exponential pace, there are only two options left for every business: to either look to the future and locate the opportunities AI presents, or to react on an oncoming basis and fall behind where it will be near impossible to catch up sooner than later.
Find a Way to Let Go of Fear
It is human nature to fear change, to fear the unknown future, and to try to ignore the things that we fear. Many executives and business leaders allow this fear to keep them from taking the steps necessary to move forward. It stops them from making decisions and stops the company from growing.
Fear quite simply stems from uncertainty. If we are uncertain or do not have enough information about something, we tend to be resistant to or afraid of what is to come, halting us.
The opposite of that coin is certainty, and with certainty comes power — the power to choose our path and the confidence to make bold choices that propel us forward. Strategy based on uncertainty is high-risk, but strategy based on certainty is low-risk. But how do you gain that certainty that allows you to make choices with confidence?
There is a phenomenon that Karen and I discussed in this podcast episode called a “black swan event.” This is an event that comes along without any warning. However, I firmly believe that there are always signs that indicate what is to come, even amid a black swan event.
If you go to a beach and look out onto the water, you will notice a bunch of white swans close to the shore, and you admire them for their grace and beauty. Now, look farther out onto the ocean, and you see more white swans, but you also see a black swan. Many people are so preoccupied with the white swans up close that they do not bother to expand their gaze to see the black swan farther out, leaving them surprised when it comes close.
The same is true for business. By taking the time to look out into the future, you can anticipate and turn uncertainty to certainty by seeing the “black swan” heading your way, so to speak. Only then can you understand the price of not doing anything when predictable disruptions are heading your way. Ask yourself, if you know something is going to happen, what is the cost of not doing it? More often than not, this cost will be far superior to any immediate cost in taking a step forward in an Anticipatory direction.
Make an Effort to Find the Black Swan
The key to anticipating the future in the face of technological transformation is to not ignore the black swan. The future is not unpredictable, and the first step to becoming an Anticipatory Leader is realizing that everything, and I do mean everything, runs in cycles. The moon has cycles, and astronomers can tell you exactly what day in March 2040 it will be full. The stock market will always go down and will always come back up.
What keeps us stuck in fear and blind to those predictable cycles is linear change. We went from 3G to 4G and now have 5G computing. What comes next? We will never go back to slower processing power, so obviously 6G, 7G, and so forth. AI is also a linear change. We will never go back to a time without AI. The secret is out, it is being applied by many, and while regulations may change around it, we will continue to use it as computing power increases. AI applications will only ever keep moving forward and transforming the way that we do business, so it is crucial that you embrace it now.
The key is identifying the next inevitable step in linear change by looking at Hard Trends. These future certainties that will happen should be separated from the Soft Trends that are based on assumptions and can be changed. By understanding the Hard Trends that are coming your way, you improve the confidence in yourself and your team to overcome your fear of the unknown and, instead, make more bold choices. You gain the ability to turn disruption into a choice, and influence the Soft Trends to your advantage.
High mortgage rates and an uptick in housing supply took some pressure off price growth, but prices aren’t falling because inventory is still low
U.S. home prices climbed 0.4% month over month in December—the smallest increase since June—according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. December represented the third straight month of slowing price growth. On a year-over-year basis, prices rose 6.6%.
This is according to the Redfin Home Price Index (RHPI), which is similar to the S&P CoreLogic Case-Shiller Home Price Indices but publishes more than one month earlier. December data covers the three months ending Dec. 31, 2023. Read the full RHPI methodology here.
"Many home purchases that closed in December were negotiated in November, when mortgage rates were near the highest level in over two decades. That likely depressed home price growth because buyers were grappling with limited purchasing power," said Redfin Senior Economist Sheharyar Bokhari.
Home price growth also likely slowed in December because the housing shortage eased slightly, giving buyers more options to choose from; new listings rose 0.1% to the highest seasonally adjusted level since September 2022. Still, housing supply remained far below pre-pandemic levels, preventing home prices from dropping as buyers compete for a limited pool of homes.
Overall, homebuying conditions have been improving. Price growth is slowing, supply is on the rise and mortgage rates have fallen significantly since their October peak. Price growth also appears to be normalizing as the housing market becomes more balanced; the 0.4% gain in December is roughly in line with monthly increases that occurred the years leading up to the pandemic.
“Homebuyers can take solace in the fact that prices are unlikely to balloon again like they did during the pandemic homebuying frenzy, but they probably won’t fall any time soon, either,” Bokhari said. “That’s because supply isn’t growing enough to bring prices down, and mortgage rates are no longer falling enough to drive prices up significantly.”
Prices Dropped Fastest in Austin, TX and Climbed Fastest in Chicago
Fifteen of the 50 most populous U.S. metropolitan areas posted month-over-month price decreases in December, though all but one of those declines were less than 1%. In Austin, TX, prices fell 1.1%—the biggest drop among the metros Redfin analyzed. Next came Oakland, CA (-0.9%), Sacramento, CA (-0.8%), Miami (-0.6%) and Nashville, TN (-0.6%).
In Chicago, home prices rose 2.6% month over month—the largest increase among the 50 most populous metros. Rounding out the top five are San Jose, CA (1.7%), Pittsburgh (1.6%), Virginia Beach, VA (1.4%) and Charlotte, NC (1.1%).
To view the full report, including a chart and metro-level summary, please visit: https://www.redfin.com/news/redfin-home-price-index-december-2023/
-- Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.69 percent.
“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” said Sam Khater, Freddie Mac’s Chief Economist. “Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace.”
News Facts
- The 30-year FRM averaged 6.69 percent as of January 25, 2024, up from last week when it averaged 6.60 percent. A year ago at this time, the 30-year FRM averaged 6.13 percent.
- The 15-year FRM averaged 5.96 percent, up from last week when it averaged 5.76 percent. A year ago at this time, the 15-year FRM averaged 5.17 percent.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. For more information, view our Frequently Asked Questions.
Freddie Mac’s mission is to make home possible for families across the nation. We promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, we have helped tens of millions of families buy, rent or keep their home. Learn More: Website
Freddie Mac (OTCQB: FMCC) Multifamily today announced its 2023 volume totaled over $49 billion, including $48.3 billion in multifamily financing and over $883 million in Low-Income Housing Tax Credit (LIHTC) equity investments. The company met its mission-driven affordable housing targets, supporting 423,177 affordable rental units across the United States. The Freddie Mac data released today indicates that the company will achieve all of its 2023 Multifamily affordable housing goals set by the Federal Housing Finance Agency (FHFA).
A total of 66% of 2023 production volume qualified as “mission-driven affordable housing,” far exceeding the 50% goal set by FHFA. More than 67% of goal-eligible units financed through loan acquisitions were affordable to low-income residents earning less than 80% of area median income (AMI) and more than 20% were affordable to very low-income residents with incomes no greater than 50% of AMI, surpassing both goals. In total, 92% of all units financed in 2023 were affordable at or below 120% of AMI.
“In 2023, Freddie Mac Multifamily was proud to again surpass our ambitious affordable housing goals, despite significant headwinds facing the overall market,” said Kevin Palmer, head of Multifamily for Freddie Mac. “That is a credit to our team, our Optigo® lenders and their borrowers. We continue to be focused on and driven by all aspects of our mission. In addition to supporting affordability, in a difficult market like this one, when other liquidity providers step back, Freddie Mac Multifamily remains a steady provider of market rate loans, helping to support liquidity and stability in all market conditions.”
With more than $883 million in LIHTC equity investments in 2023, Freddie Mac achieved its LIHTC equity Duty to Serve target, aligning with FHFA’s decision to increase the LIHTC equity cap for 2024. Since 2018, Freddie Mac Multifamily has committed over $4 billion in LIHTC equity, ensuring nearly 30,000 units of affordable housing were created or preserved.
In 2023, Freddie Mac Multifamily helped to create and preserve affordable rental housing by funding a record $2.6 billion in forward conversions, which supported more than 21,000 newly constructed or rehabilitated affordable units. In addition, Freddie Mac Multifamily issued new commitments to fund $2.3 billion in future years, supporting over 22,000 units that will be constructed or rehabilitated. The forward program enhances the supply of new and rehabilitated affordable housing by providing certainty of permanent financing, even in volatile markets.
In addition, Freddie Mac Multifamily financed more than $13 billion in Targeted Affordable Housing in 2023, supporting nearly 108,000 rent-restricted affordable units. As Freddie Mac Multifamily works to advance resident-centered housing, 2023 marked a milestone in financing nearly 29,000 manufactured housing community pads with tenant protections that met or exceeded the standards laid out in its Duty to Serve Plan.
Palmer added, “In a housing market where affordability continues to be a major impediment for consumers, our team financed more than 423,000 affordable rental units. We are proud of our ability to help hundreds of thousands of families live in a place they can call home.”
About Us
Freddie Mac Multifamily is a national multifamily housing finance leader. Historically, more than 90% of the eligible rental units we fund are affordable to families with low-to-moderate incomes earning up to 120% of area median income. Freddie Mac securitizes more than 90% of the multifamily loans it purchases, transferring interest-rate risk, liquidity risk, and the majority of expected credit risk away from U.S. taxpayers to private investors.
Freddie Mac’s mission is to make home possible for families across the nation. We promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, we have helped tens of millions of families buy, rent or keep their home. Learn More:
Website |
People fail to succeed for only one of two reasons; they either don’t know what they are supposed to do, or they won’t do what they are supposed to do. Coaching has always been a way to help people learn the first part, knowing what to do, and then help guide them toward actually doing what they are supposed to do. As a coach, I know all I can do is provide the answers and the client needs to provide the actions in order for it all to come together.
Many people desire coaching, but often can’t find a program that fits their needs, or they can’t make the investment (or won’t make the investment) to hire the coach to help them. For years I have dealt with that issue; knowing that people will succeed if they just invest in themselves, but they don’t believe the investment will pay off for them. So today, I make sure that there is no longer a financial risk when it comes to coaching. If you do better, you pay. If you don’t, you owe nothing. Just keep in mind that you can be fired for not working and taking a spot away from someone who will!
Here is how it works. We look at your 2023 production and establish a baseline for units and dollar volume. We do a complete business plan and schedule of activities you are going to do going forward. We set up our weekly 30-minute accountability sessions, and we make adjustments based upon your specific results! At the end of each month if your production exceeds the monthly baseline, you pay 10bps on the volume that exceeds your baseline. If you don’t exceed the monthly baseline, you owe nothing. Your coaching continues as long as you like or need, and once you leave the program you are responsible for the payments for the next 12 months as established by your original baseline. That’s it. No initial investment, no fees at all if your production doesn’t exceed what you were doing prior to coaching!
I have limited space in my schedule for originators, managers, or corporate clients, so if you are interested, reach out to set up a call to see if we should move forward together to grow your business absolutely risk free!
Questions or comments: This email address is being protected from spambots. You need JavaScript enabled to view it.
2024 is shaping up to be more active than 2023 for homebuyers and sellers, with mortgage applications and new listings rising. But Redfin economists believe demand and listings would be rising more if not for harsher-than-usual winter weather.
Mortgage-purchase applications are up 8% from a month ago, and Redfin agents report that lower mortgage rates are piquing buyers’ interest, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. On the sell side, new listings increased 8% year over year during the four weeks ending January 14.
Buyers and sellers are making moves largely because mortgage rates are holding steady in the mid-6% range, down from 8% in October. The typical U.S. homebuyer’s monthly housing payment is $2,456 with this week’s average rate; while that’s up 10% year over year, it’s down from October’s record high of over $2,700.
Redfin economists say buyer demand and listings would likely be picking up more if not for the severe winter weather much of the country experienced over the last week. “We expected both buyers and sellers to react more strongly to last month’s drop in mortgage rates once the holidays passed, but frigid weather and snowstorms have halted a lot of buying and selling plans,” said Redfin Economic Research Lead Chen Zhao. “As long as rates don’t shoot up, we expect the market to pick up as the spring season approaches.”
Redfin agents say weather conditions aside, buyers are feeling more optimistic. “People who were casually house hunting when rates were higher are getting serious now,” said Chicago Redfin Premier agent Dan Close. “Buyers are feeling more confident that they can get good value for their money, and many first-timers are jumping in because Chicago rents are still rising. Homeowners who were waiting for the holidays to be over and rates to come down before selling are getting ready to list. I have several listings prepped to hit the market, some as early as this week and some throughout the rest of the first quarter.”
Leading indicators
|
Indicators of homebuying demand and activity |
||||
|
Value (if applicable) |
Recent change |
Year-over-year change |
Source |
|
|
Daily average 30-year fixed mortgage rate |
6.88% (Jan. 17) |
Up slightly from 6.78% a week earlier |
Up from 6.07% |
|
|
Weekly average 30-year fixed mortgage rate |
6.66% (week ending Jan. 11) |
Near lowest level since May |
Up from 6.33% |
|
|
Mortgage-purchase applications (seasonally adjusted) |
Up 9% from a week earlier; up 8% from a month earlier (as of week ending Jan. 12) |
Down 20% |
||
|
Google searches for “home for sale” |
Up 10% from a month earlier (as of Jan. 16) |
Down 13% |
||
|
We excluded Redfin’s Homebuyer Demand Index this week to ensure data accuracy |
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Key housing-market data
|
U.S. highlights: Four weeks ending January 14, 2023 Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision. |
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|
Four weeks ending January 14, 2023 |
Year-over-year change |
Notes |
|
|
Median sale price |
$362,113 |
4.2% |
|
|
Median asking price |
$372,220 |
5.4% |
|
|
Median monthly mortgage payment |
$2,456 at a 6.66% mortgage rate |
9.8% |
Down nearly $300 from all-time high set during the four weeks ending Oct. 22 |
|
Pending sales |
51,411 |
-3.1% |
|
|
New listings |
48,507 |
7.8% |
|
|
Active listings |
762,737 |
-2.4% |
Smallest decline since June |
|
Months of supply |
4.4 months |
+0.3 pts. |
4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions. |
|
Share of homes off market in two weeks |
25.1% |
Unchanged |
|
|
Median days on market |
44 |
-2 days |
|
|
Share of homes sold above list price |
23.2% |
Up from 21% |
|
|
Share of homes with a price drop |
3.9% |
+0.2 pts. |
|
|
Average sale-to-list price ratio |
98.3% |
+0.5 pts. |
|
|
Metro-level highlights: Four weeks ending January 14, 2023 Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy. |
|||
|
Metros with biggest year-over-year increases |
Metros with biggest year-over-year decreases |
Notes |
|
|
Median sale price |
Anaheim, CA (16.6%) West Palm Beach, FL (14.8%) Newark, NJ (14.1%) Fort Lauderdale, FL (13.1%) Miami (12.8%) |
Oakland, CA (-3.4%) Austin, TX (-2.8%) Fort Worth, TX (-0.3%) San Antonio, TX (-0.1%) |
Declined in 4 metros |
|
Pending sales |
San Jose, CA (10.6%) Detroit (9.5%) Milwaukee, WI (6.1%) Columbus, OH (5.6%) Pittsburgh, PA (4.7%) |
Newark, NJ (-14.3%) New Brunswick, NJ (-13.9%) New York (-13.2%) San Diego (-12.2%) West Palm Beach, FL (-11.3%) |
Increased in 13 metros |
|
New listings |
Phoenix (24.4%) Minneapolis, MN (22.1%) Pittsburgh, PA (19.1%) Houston (18.6%) San Antonio, TX (17.6%) |
Chicago (-13.8%) Atlanta (-10.2%) Newark, NJ (-7.3%) Providence, RI (-7.1%) Portland, OR (-5.6%) |
Declined in 10 metros |
To view the full report, including charts, please visit:
https://www.redfin.com/news/housing-market-update-buyers-sellers-more-active
![Single Women Own 2.71 Million More Homes Than Single Men [New LendingTree Report]](/media/k2/items/cache/1d4116ab0537868d1c0c6bdc5f686e9e_S.jpg)
Lending Tree analyzed the latest housing data and found that single women own 10.95 million homes, while single men own 8.24 million. That means single women own an average of 12.93% of the owner-occupied homes across the 50 states, versus 10.22% among single men.
States with the largest share of single women homeowners
- Delaware
- Louisiana
- Mississippi
- Alabama
- Florida
States with the largest share of single men homeowners
- New Mexico
- North Dakota
- Alaska
- South Dakota
- Wyoming
- You can check out our full report here: https://www.lendingtree.com/home/mortgage/single-women-own-more-homes-than-single-men-do/
LendingTree's Senior Economist and report author, Jacob Channel, had this to say.
"Though single women are more likely to own a home than single men are, a majority of homes are nonetheless owned by couples and families. This goes to show that because homeownership is often so expensive, regardless of one’s gender, it can be very difficult to become a homeowner by yourself. This is especially true in today’s high price, high rate, housing market."
Empty-nest baby boomers own 28% of the nation’s large homes, while millennials with kids own just 14%. The landscape has transformed over the last decade: 10 years ago, young families were just as likely as empty nesters to own large homes
Empty-nest baby boomers own nearly 3 in 10 (28.2%) large U.S. homes. That’s twice as many as millennials with kids, who own just 14.2% of the country’s large homes, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Gen Zers with kids own almost none (0.3%) of them.
An additional 7.5% of the country’s large homes are owned by baby boomers with households of three adults or more; this category likely consists mostly of adult children living with their boomer parents.
The report is based on a Redfin analysis of U.S. Census data from 2022 that breaks down the share of three-bedroom-plus homes owned and occupied by each generation, by household type and size. For the purposes of this report, Redfin used the term “empty nesters” to refer to households headed by baby boomers with 1-2 adults living in the home. See the report for full details on methodology.
It’s worth noting that even though millennials with kids own half as many large homes as empty nesters, there are more millennials than baby boomers. Millennials make up roughly 28% of the country’s adult population, the largest share of any generation. They’re followed by baby boomers (27%), Gen Xers (25%) and Gen Zers (12%).
Baby boomers own an outsized share of large homes for several reasons, current and historical:
- There’s not much financial incentive to let go of large homes. Most (54%) boomers who own homes have no mortgage. For that group, the median monthly cost of owning a home, which includes insurance and property taxes, among other costs, is just $612. For the boomers who do have a mortgage, nearly all have a much lower interest rate than they would if they sold and bought a different home with today’s near-7% rates: Even if they downsized, they may have a nearly identical monthly payment.
- For millennials and Gen Zers, it’s harder to find and afford a home. Large homes are in short supply, largely due to the mortgage-rate lock-in effect and a recent lack of homebuilding. Large homes are also hard to afford: 2023 was the least affordable homebuying year on record; it was especially hard for younger Americans who don’t have equity from a prior home.
- Some young Americans don’t want to own a home. A recent Redfin survey found that 12% of millennials who believe they’ll never own a home aren’t interested in homeownership, and 7% said they don’t plan to buy because they don’t want to maintain a home.
- Boomers built wealth. Many older Americans benefited from an abundance of newly built homes and favorable economic conditions during their prime moneymaking years, during the 1990s economic boom. Those homes proved to be good investments: Home values have grown four times faster than incomes over the last several decades. Today, boomers hold half of the wealth in the U.S., and much of it is in real estate.
- Boomers are older, so they’ve had more time to buy homes.
“There’s unlikely to be a flood of large homes hitting the market anytime soon,” said Redfin Senior Economist Sheharyar Bokhari. “Logically, empty nesters are the most likely group to sell big homes and downsize: They no longer have children living at home and don’t need as much space. The problem for younger families who wish their parents’ generation would list their big homes: Boomers don’t have much motivation to sell, financially or otherwise. They typically have low housing costs, and the bulk of boomers are only in their 60s, still young enough that they can take care of themselves and their home without help. Still, some boomers are ready to downsize into a condo or move somewhere new for retirement, and the mortgage-rate lock-in effect is starting to ease–so even though there won’t be a flood of inventory, there will be a trickle.”
Many young families are renting large homes in the meantime. Millennials with kids take up one-quarter (24.8%) of the three-bedroom-plus rentals in the U.S., the largest share of any generational category, followed by millennials without kids (11.6%). Empty-nest baby boomers take up the next-highest-share (11.4%) of three-bedroom-plus rentals.
45% of empty nesters own big homes, almost double the share of millennials with kids
The above addresses the share of large homes owned by each generation and household type. In looking at the share of each generation and household type that owns large homes, Redfin found that empty-nest baby boomers are almost twice as likely as millennial families to own three-bedroom-plus homes. Nearly half (45.5%) of one-to-two-person boomer households own large homes while just over one-quarter (27%) of households consisting of millennials with kids own large homes. Roughly 3% of Gen Zers with kids own them.
What type of home do the rest of millennials with kids live in?
Some young families rent large homes: Roughly 1 in 10 (9.3%) millennial-with-kid households live in three-bedroom-plus rentals. Others rent smaller units.
Other millennials live with family or roommates. Of all U.S. millennials (whether they have kids or not), roughly 17% of them live with a family member in a home that family member owns or rents–most likely their parents. Another 10% live in a home owned or rented by someone they’re not related to–most likely a roommate. Seven in 10 are the head of their own household, whether they’re owning or renting.
Older Americans own a much bigger share of large homes than they did 10 years ago, and young families own a smaller share
Who owns large homes has changed over the last decade. In 2012, empty nesters of the silent generation (who were 67-84 at the time) took up 16% of three-bedroom-plus homes. That’s a smaller share than Gen Xers (who were 32-47 at the time) with kids, who took up 19% of those large homes.
But one thing has remained the same over time: Baby boomers with no kids living at home take up the lion’s share of big houses. In 2012, empty-nest boomers (who were then 48-66) owned and occupied 26.4% of three-bedroom-plus homes in the U.S., comparable to today’s share.
Empty nesters take up at least 20% of large homes everywhere in the U.S.
Empty-nest baby boomers take up the biggest share of large homes in relatively affordable Rust Belt and southern metros. Baby boomers with one or two people in the household take up roughly one-third of three-bedroom-plus homes in Pittsburgh, PA (32.1%), Birmingham, AL (31.1%) and Cleveland, OH (30.8%), the highest shares in the nation. Next come Buffalo, NY (30.5%) and Virginia Beach, VA (30.4%). Demographics are one reason why Pittsburgh tops this list; the metro skews older: Baby boomers make up 40% of Pittsburgh’s households, a far higher share than Gen Xers (27%) or millennials (20%).
Empty nesters own at least 20% of large homes everywhere in the country. They take up the smallest share of three-bedroom-plus homes in popular migration destinations and California metros: Riverside, CA (21.9%), Salt Lake City, UT (22%), Austin, TX (22.2%), Houston (23.2%) and San Jose, CA (23.7%).
No matter the metro, millennials with kids take up no more than 18% of three-bedroom-plus homes
Young families take up the smallest share of large homes in coastal California and Florida, where large homes tend to be more expensive, and the largest share in relatively affordable inland metros.
Just about one of every 10 three-bedroom-plus homes are owned and occupied by millennials with kids in Los Angeles (9.4%), San Jose, CA (10.4%), San Francisco (10.9%), Miami (11.2%) and New York (11.8%) Millennials with kids have the largest share in Indianapolis, IN (17.6%), Minneapolis (17.4%), Cincinnati, OH (17%), Kansas City, MO (16.5%) and Riverside, CA (16.5%).
To view the full report, including, charts and metro-level data, please visit: https://www.redfin.com/news/empty-nesters-own-large-homes
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Rising supply has led to rising vacancies, motivating landlords to lower asking rents, which fell 1% from a year earlier.
The median U.S. asking rent fell 0.8% year over year in December to $1,964, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the third consecutive decline, following a 2.1% annual drop in November—which was the largest since 2020—and a 0.3% dip in October.
December rents were little changed from the prior month (-0.2%).
The rental market has lost steam largely due to a jump in supply fueled by a building boom in recent years. That has left many landlords struggling to fill vacancies, motivating some of them to drop asking rents. Some landlords are also offering one-time concessions like a free month’s rent or reduced parking costs to attract renters. This means the prices renters are paying in total are likely coming down faster than they appear to be in the data.
Other reasons rents have cooled include economic uncertainty, slowing household formation, and affordability challenges, as rents are still only 4.4% below their record high. Additionally, there are new signs that the economy is slowing; Americans are starting to tighten their belts, which could be contributing to the decline in rents.
“High supply—more so than low demand—is driving rent declines. But if mortgage rates continue to drop at a fast clip in 2024, slowing rental demand could become a major driver of rent declines,” said Redfin Economics Research Lead Chen Zhao. “That’s because more Americans would ditch the rental market to become homeowners, leaving landlords with even more vacancies.”
There are more newly built and under-construction apartments in the U.S. than there were a year ago; the number of completed apartments is near the highest level in more than 30 years, and the number under construction is just shy of its record high.
Because renters have an increasing number of buildings to choose from, vacancies have climbed. The rental vacancy rate rose to 6.6% in the third quarter—the most recent period for which data is available—the highest level since the first quarter of 2021.
Rents Rise in the Midwest and Northeast, Fall in the West and South
The median asking rent in the Midwest rose 3.7% year over year to $1,434. Rents also rose in the Northeast, climbing 1.7% to $2,439. Meanwhile, rents fell 1% year over year to $1,632 in the South, and declined 0.6% to $2,346 in the West.
Rents are likely holding up best in the Midwest and Northeast because those regions haven’t been building as much as the South and West, meaning some landlords have less incentive to drop prices because they’re not dealing with as many vacancies.
“With rents falling and vacancies rising, now is a good time to shop around or try to renegotiate your rent if your lease is up—especially if you’re a renter in the South or West,” Zhao said.
To view the full report, including charts and methodology, please visit:
https://www.redfin.com/news/redfin-rental-report-december-2023
The share of homeowners with relatively low rates has fallen because some have given up on waiting to move until rates nosedive, and everyone who has purchased a home in the last year did so when rates were above 6%
Nationwide, 88.5% of U.S. homeowners with mortgages have an interest rate below 6%, down from a record high of 92.8% in mid-2022, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.
That means more than 88.5% of homeowners with mortgages have a rate below the current weekly average of 6.66%, prompting many to stay put instead of selling and buying another home at a higher rate—a phenomenon called the “lock-in effect.”
But for most people, it’s not realistic to stay put forever. The share of homeowners with a rate below 6% has fallen from its record high partly because some homeowners are opting to bite the bullet and give up their low rate in order to move. Many are selling because a major life event like a divorce has given them no other choice, while others are putting their homes on the market because they want to live in a different house or city.
Another reason the share has dipped: Everyone who purchased a home in the last year—repeat buyers and first-time buyers alike—was entering the market at a time when the average mortgage rate was above 6%.
“I’m working with a lot of homeowners who are selling because of things like divorces, new jobs or deaths in the family,” said David Palmer, a Redfin Premier real estate agent in Seattle.
“I’m also working with homeowners who are bursting at the seams and selling because they’ve outgrown their current home.”
It’s worth noting that for some homeowners, the fact that home prices soared during the pandemic means they have enough equity to justify selling and taking on a higher rate—especially if they’re downsizing or moving somewhere more affordable.
The Lock-In Effect Continues to Fuel America’s Housing Shortage, But Listings Have Started to Tick Up
Americans continue to face a shortage of homes for sale, and a primary reason is the lock-in effect.
But home listings have been ticking up year over year, in part because some homeowners simply have to move, as discussed above. Listings are also rising because mortgage rates have fallen enough in recent weeks to convince some homeowners to let go of their low rate. Today’s 6.66% average mortgage rate is down from a peak of roughly 8% in October.
“Sellers have started coming out of the woodwork because that’s typical for January and because mortgage rates have dropped,” Palmer said. “They’re also coming to terms with the fact that rates aren’t going back down to 3% any time soon, which makes it easier to pull the trigger on selling. But a lot of sellers are worried about finding their next house because even though listings are rising, there’s still a housing shortage. That’s part of the reason so many sellers remain on the sidelines.”
Breakdown of where today’s homeowners fall on the mortgage-rate spectrum
The following is according to a Redfin analysis of data from the Federal Housing Finance Agency’s National Mortgage Database as of the third quarter of 2023, the most recent period for which data is available. The share of homeowners with rates below 6% likely fell further in the fourth quarter because a dip in mortgage rates drove more people to buy and sell homes, even as rates remained above 6%.
- Below 6%: 88.5% of mortgaged U.S. homeowners have a rate below 6%, down from a record 92.8% in the second quarter of 2022.
- Below 5%: 78.7% have a rate below 5%, down from a record 85.6% in the first quarter of 2022.
- Below 4%: 59.4% have a rate below 4%, down from a record 65.3% in the first quarter of 2022.
- Below 3%: 22.6% have a rate below 3%, down from a record 24.6% in the first quarter of 2022.
Mortgage Rates Have Dipped, But It’s Still More Expensive to Buy and Sell Homes Than It Was a Year Ago
The typical homebuyer purchasing today’s median-priced U.S. home at the average mortgage rate takes on a monthly payment of $2,399. While that’s down more than $300 from the all-time high in 2022, it’s still up 7.4% from a year ago. That’s because both mortgage rates and home prices are higher than they were at this time last year.
Nearly all homeowners with a mortgage have a rate below the one they would get if they bought a home today, but the difference in monthly payments varies depending on each individual situation. A mortgage holder in the 3% to 4% range is more likely to feel handcuffed to their home than someone in the 5% to 6% range, for instance.
To view the full report, please visit:
https://www.redfin.com/news/mortgage-rate-lock-in-housing-2023
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.66 percent.
“Mortgage rates have not moved materially over the last three weeks and remain in the mid-six percent range, which has marginally increased homebuyer demand,” said Sam Khater, Freddie Mac’s Chief Economist. “Even this slight uptick in demand, combined with inventory that remains tight, continues to cause prices to rise faster than incomes, meaning affordability remains a major headwind for buyers. Potential homebuyers should look closely at existing state and local resources, such as down payment assistance programs, which can considerably help defray closing costs.”
News Facts
- The 30-year FRM averaged 6.66 percent as of January 11, 2024, up from last week when it averaged 6.62 percent. A year ago at this time, the 30-year FRM averaged 6.33 percent.
- The 15-year FRM averaged 5.87 percent, down from last week when it averaged 5.89 percent. A year ago at this time, the 15-year FRM averaged 5.52 percent.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. For more information, view our Frequently Asked Questions.
Freddie Mac’s mission is to make home possible for families across the nation. We promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, we have helped tens of millions of families buy, rent or keep their home. Learn More: Website | Consumers | Twitter | LinkedIn | Facebook | Instagram | YouTube
In 2024, economic results will likely remain mixed. While a total collapse is unlikely and a recession may be avoidable, some Americans will still struggle to make ends meet in the face of relatively high rates and higher-than-ideal inflation. Here are LendingTree's predictions for the state of housing, jobs and the economy in 2024.
Potential economic positives in 2024:
- The housing market likely won’t crash this year
- Inflation will likely come down
- Across the board, rates should level off, if not eventually fall
- Wage growth will continue to outpace inflation
- We may avoid a recession
Potential economic negatives in 2024:
- The housing market will remain prohibitively expensive for many
- Home sellers could face challenges
- Savings will stay depressed
- Total debt will stay high
You can find our full 2024 housing and economic predictions here: https://www.lendingtree.com/home/mortgage/housing-economy-expectations-study/
LendingTree's Senior Economist, Jacob Channel, added:
"Like any year, 2024 will doubtlessly be harder for some than it is for others. Those who are struggling should remember that the sooner they ask for help and the more proactive they are about trying to get their finances in check, the better off they’ll be. No matter how bad things may seem, burying your head in the sand and hoping that problems go away on their own is usually nothing more than a recipe for disaster."
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