Rising Rates and First-Time Homebuyers Drive
Latest HousingPulse Tracking Survey Finds
WASHINGTON, D.C. (December 20) – Rising mortgage rates helped push
first-time homebuyers to buy properties in November, while investors
lost some of their enthusiasm for distressed properties last month.
These are two of the major findings of the latest Campbell/Inside
Mortgage Finance HousingPulse Tracking Survey.
first-time homebuyer share of home purchases surged from 34.4% in
October to 37.2% last month as long-time mortgage rates started to climb
from record lows in early November.
Meanwhile, investor activity continued a two-month decline, falling from
21.4% for home purchase transactions in October to 19.9% in November.
During September, investor participation peaked at 22.3%, a 15-month
high, according to the closely watched survey. Separately, the market
share of current homeowners also fell in November – going from 44.2% in
October to 42.9% last month.
recent surge in interest rates has made potential homebuyers nervous,”
explained Thomas Popik, director of the HousingPulse survey. “If
rates go up much more, then a good percentage of them will no longer
qualify for the properties they want. As a result, they’re making bids
on homes and quickly closing before their rate locks expire.”
estate agents responding to the latest survey commented on the
rate-induced surge of homebuyer interest. “First-time buyers are back
looking at homes,” reported an agent in Oregon. “Interest rates have
helped spur recent activity,” added an agent in Colorado.
Current homeowners, many of whom must sell their current residence to
purchase another, are often precluded from quickly closing on
properties, Popik noted, in explaining their reduced share of home
purchase transactions in November.
surge in home buying did not affect sales of all properties equally.
Short sales, which require many months to obtain mortgage-servicer
approval, were often left out. “Homebuyer concern for locking in
interest rates while rates are low caused them to bypass short sale
listings,” commented an agent in Hawaii. “Most people are not prepared
to wait for a short sale to settle…Buyers are concerned that interest
rates are rising and don't want to take a chance by agreeing to settle 5
or 6 months in the future,” wrote an agent in Virginia.
large inventory of distressed properties is making investors nervous
that prices will decline in 2011, Popik reported, adding that many
investors see their previous business model – buy, rehab, and
immediately sell – becoming increasingly difficult to execute and are
now being forced to rent their properties. “Investors are starting to
get a little flaky and aren't closing after getting short sale approval
as they feel prices will drop further,” stated an agent in Arizona.
“Investors interested in buy and hold have become more numerous in
recent months,” said an agent in Virginia.
Campbell/Inside Mortgage Finance HousingPulse Tracking Survey
involves more than 3,000 real estate agents nationwide each month and
provides up-to-date intelligence on home sales and mortgage usage
more information on the survey, contact John Campbell at Campbell
Surveys at (202) 363-2069 or