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Florida saw the highest cancellation rates
The Sun Belt region – which saw home prices jump by double digits during the pandemic – lost some of its heat as rates surged higher.
Among the 50 most populous metros analyzed by Redfin, Atlanta saw the most pending sales fall out of contract in September. Some 24.4% of contracts were canceled in the area that month, up from 23.6% in August – but slightly down from 27.1% a year earlier.
Metros in Florida rounded up the top five cities with the highest shares of cancellations, with Jacksonville seeing 24% of contracts fall through in September, followed by Orlando (23.6%), Tampa (22.7%), and Fort Lauderdale (22%).
The reason for the pullback by certain buyers isn’t a surprise, given how quickly house prices have outpaced salary growth. Add in this year’s high mortgage rates and payments become unaffordable for many.
For instance, those looking to purchase in Fort Lauderdale had to earn 22.2% more than they did a year ago to afford a median-priced home of $420,000 in August, a separate survey by Redfin found. That’s an average income of $114,549 – nearly $40,000 above the national US median income of $75,000.
"Affordability is a big issue," Jeffrey Ruben, president of WSFS Mortgage, told Yahoo Finance. "The interest rate environment is definitely creating constraints in our industry. It’s become a depressed kind of housing market."
'Buyers are frustrated'
Higher mortgage rates weren’t the only reason derailing home purchases.
"Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs," Kruayai said in a statement. "Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal."
In Florida, so many insurers have pulled out of the state due to rising costs that it has gotten harder for homebuyers to secure a homeowner’s policy at a reasonable price. Homeowner’s insurance is a must-have to secure a mortgage, leaving buyers scrambling to find an insurer in the first place and at a cost that won’t leave them ineligible for a mortgage.
Builders, too, have seen cancellation rates spike as rates inched higher. According to LGI Homes latest earnings call, their cancellation rate during the third quarter was 27.9%, compared to 21.3% in the same period last year.
If there’s one silver lining for price-struck folks, it’s that homebuilders have taken notice of the shift in buyer sentiment and are offering more concessions to close deals.
Read more: Types of mortgage loans: Which is best for you?
Some 32% of builders said they cut prices in October, according to the National Association of Home Builders (NAHB), compared with 25% in August. That’s the highest rate since December 2022, when 35% of builders issued price reductions. The average price cut was 6%.
At the same time, 62% of builders said they offered sales incentives of all types in October, up from 59% the month prior and tied with the previous high for this cycle set in December 2022.
"The cost of a home through higher rates is becoming more expensive, and those on the hunt have no choice but to seek other financing such as adjustable-rate mortgages (ARMs) or new construction where there may be opportunities to get a lower rate," Ruben said. "Buyers today are growing frustrated."
More homebuyers back out of deals as mortgage rates hit 23-year high
Gabriella Cruz-Martinez
·Personal finance writer
Sat, November 4, 2023
Homebuyers are backing out of deals at the highest rate in nearly a year, a new study found. The culprit: higher mortgage rates.
Roughly 53,000 US home purchase agreements fell through in September, according to Redfin, equal to 16.3% of homes that went under contract that month. That’s the highest percentage of canceled contracts since October 2022 when mortgage rates surpassed 7% for the first time in two decades. The share is also up from 15.2% a month earlier and 15.8% a year earlier.
Pandemic boomtowns where home prices skyrocketed due to the influx of remote workers were hit the hardest with buyers with cold feet, Redfin noted, with some areas in Florida seeing contract cancellation rates over 20%.
The reaction from buyers comes as mortgage rates remained at 23-year highs between August and September, convincing rate-sensitive folks to call it quits on their home purchase plans. Even more cancellations may be on the horizon, as rates hover near 8%.
Read more: Mortgage rates at over 20-year high: Is 2023 a good time to buy a house?
"Buyers are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out," said Heather Kruayai, a Redfin premier agent in Jacksonville, Fla., in a statement.
Potential homebuyers visit open house. (Credit: Getty Creative) (The Good Brigade via Getty Images)
Gabriella Cruz-Martinez
·Personal finance writer
Sat, November 4, 2023
Homebuyers are backing out of deals at the highest rate in nearly a year, a new study found. The culprit: higher mortgage rates.
Roughly 53,000 US home purchase agreements fell through in September, according to Redfin, equal to 16.3% of homes that went under contract that month. That’s the highest percentage of canceled contracts since October 2022 when mortgage rates surpassed 7% for the first time in two decades. The share is also up from 15.2% a month earlier and 15.8% a year earlier.
Pandemic boomtowns where home prices skyrocketed due to the influx of remote workers were hit the hardest with buyers with cold feet, Redfin noted, with some areas in Florida seeing contract cancellation rates over 20%.
The reaction from buyers comes as mortgage rates remained at 23-year highs between August and September, convincing rate-sensitive folks to call it quits on their home purchase plans. Even more cancellations may be on the horizon, as rates hover near 8%.
Read more: Mortgage rates at over 20-year high: Is 2023 a good time to buy a house?
"Buyers are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out," said Heather Kruayai, a Redfin premier agent in Jacksonville, Fla., in a statement.
Potential homebuyers visit open house. (Credit: Getty Creative) (The Good Brigade via Getty Images)
Florida saw the highest cancellation rates
The Sun Belt region – which saw home prices jump by double digits during the pandemic – lost some of its heat as rates surged higher.
Among the 50 most populous metros analyzed by Redfin, Atlanta saw the most pending sales fall out of contract in September. Some 24.4% of contracts were canceled in the area that month, up from 23.6% in August – but slightly down from 27.1% a year earlier.
Metros in Florida rounded up the top five cities with the highest shares of cancellations, with Jacksonville seeing 24% of contracts fall through in September, followed by Orlando (23.6%), Tampa (22.7%), and Fort Lauderdale (22%).
The reason for the pullback by certain buyers isn’t a surprise, given how quickly house prices have outpaced salary growth. Add in this year’s high mortgage rates and payments become unaffordable for many.
For instance, those looking to purchase in Fort Lauderdale had to earn 22.2% more than they did a year ago to afford a median-priced home of $420,000 in August, a separate survey by Redfin found. That’s an average income of $114,549 – nearly $40,000 above the national US median income of $75,000.
"Affordability is a big issue," Jeffrey Ruben, president of WSFS Mortgage, told Yahoo Finance. "The interest rate environment is definitely creating constraints in our industry. It’s become a depressed kind of housing market."
'Buyers are frustrated'
Higher mortgage rates weren’t the only reason derailing home purchases.
"Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs," Kruayai said in a statement. "Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal."
In Florida, so many insurers have pulled out of the state due to rising costs that it has gotten harder for homebuyers to secure a homeowner’s policy at a reasonable price. Homeowner’s insurance is a must-have to secure a mortgage, leaving buyers scrambling to find an insurer in the first place and at a cost that won’t leave them ineligible for a mortgage.
Builders, too, have seen cancellation rates spike as rates inched higher. According to LGI Homes latest earnings call, their cancellation rate during the third quarter was 27.9%, compared to 21.3% in the same period last year.
If there’s one silver lining for price-struck folks, it’s that homebuilders have taken notice of the shift in buyer sentiment and are offering more concessions to close deals.
Read more: Types of mortgage loans: Which is best for you?
Some 32% of builders said they cut prices in October, according to the National Association of Home Builders (NAHB), compared with 25% in August. That’s the highest rate since December 2022, when 35% of builders issued price reductions. The average price cut was 6%.
At the same time, 62% of builders said they offered sales incentives of all types in October, up from 59% the month prior and tied with the previous high for this cycle set in December 2022.
"The cost of a home through higher rates is becoming more expensive, and those on the hunt have no choice but to seek other financing such as adjustable-rate mortgages (ARMs) or new construction where there may be opportunities to get a lower rate," Ruben said. "Buyers today are growing frustrated."
Lack of affordable housing in Los Angeles' Venice Beach neighborhood inspires activism and art
Fri, November 3, 2023
LOS ANGELES (AP) — As more and more of her friends and neighbors found themselves priced out of rental units in Venice Beach, Judy Branfman began photographing the dozens of houses, bungalows and apartments being sold, renovated and then relisted at double or triple the cost.
Branfman started with only the vague idea that she should be documenting the growing problem of evictions and housing unaffordability in her beloved west Los Angeles neighborhood. The writer and activist lamented that Venice, where tourists flock to the famous boardwalk and Muscle Beach, has been slowly shedding its historically bohemian vibe and becoming another enclave for the wealthy.
Word spread about her photo project and earlier this year Branfman started hosting community meetings where residents could share their experiences with evictions that forced them to move out of the area and, in some cases, into homelessness. Some people recited poems. Others expressed themselves through paintings. And the more academically-minded among them began compiling housing and eviction statistics.
Branfman's initial notion to just shoot a few photos has culminated in an unlikely but ambitious art-meets-data exhibit titled “Where Has All The (affordable) Housing Gone?” It's on display through Saturday at Venice's venerable Beyond Baroque gallery, a hub for cultural events and activism dating back to the late 1960s.
“The idea was to illustrate the problem, to show what we've lost. You know, make it visual so people would walk in and be a little shocked, and want to do something about it,” Branfman said at the gallery this week.
Venice became a center of the Los Angeles homelessness crisis during the coronavirus pandemic, when camps sprouted up in residential neighborhoods and along the sands. The nation’s second-largest city also has 46,000 residents who are homeless among the overall population of 4 million people, according to the most recent survey.
The area was a flashpoint because of its visibility as a city landmark — the boardwalk attracts an estimated 10 million visitors per year. A certain edginess always coexisted with a live-and-let-live ethos in the artsy beach community, but the widening of the wealth gap has become increasingly apparent as tech firms moved in and sleek modern homes went up.
As building owners seek to bring in more deep-pocketed renters, longtime residents find themselves dealing with rent increases that overwhelm their finances. Some 80% of low-income Los Angeles renters pay over half their income toward housing costs, according to data released this week by the nonprofit Angeleno Project.
While Los Angeles is on track to meet certain goals for new housing set out by recent ballot measures, “supply is severely behind demand,” the report found.
“Some 3,500 housing units are at high or very high risk of losing their affordability terms, threatening to push more families into homelessness,” said the report. “A significant dip in affordable housing that started in 2022 post-COVID-19 continues to trend downward.”
Upon entering Branfman's exhibit, visitors are confronted by her photos on an enormous and detailed map depicting, block by block, many of the nearly 1,500 rent-controlled units she says have disappeared from the housing market in Venice over two decades. In many instances, the buildings were sold to large corporations that are increasingly buying up properties and jacking up rents.
The map, and much of the exhibit, pins some of the blame for the problem on the Ellis Act, a 1985 California law that gave landlords broad authority to evict tenants in rent-controlled buildings for redevelopment, and then later list the same units at market rates. Branfman said she was “Ellis Acted” when she was evicted from a Venice apartment in 2003.
“Too many tenants are afraid to fight back. And most don't know what their rights are under the law,” she said. And even when tenants do file complaints against landlords, she said, the city very rarely prosecutes the claims.
On the wall opposite the map is a free-verse poem made up of quotes about why many renters are were afraid to take
Fri, November 3, 2023
LOS ANGELES (AP) — As more and more of her friends and neighbors found themselves priced out of rental units in Venice Beach, Judy Branfman began photographing the dozens of houses, bungalows and apartments being sold, renovated and then relisted at double or triple the cost.
Branfman started with only the vague idea that she should be documenting the growing problem of evictions and housing unaffordability in her beloved west Los Angeles neighborhood. The writer and activist lamented that Venice, where tourists flock to the famous boardwalk and Muscle Beach, has been slowly shedding its historically bohemian vibe and becoming another enclave for the wealthy.
Word spread about her photo project and earlier this year Branfman started hosting community meetings where residents could share their experiences with evictions that forced them to move out of the area and, in some cases, into homelessness. Some people recited poems. Others expressed themselves through paintings. And the more academically-minded among them began compiling housing and eviction statistics.
Branfman's initial notion to just shoot a few photos has culminated in an unlikely but ambitious art-meets-data exhibit titled “Where Has All The (affordable) Housing Gone?” It's on display through Saturday at Venice's venerable Beyond Baroque gallery, a hub for cultural events and activism dating back to the late 1960s.
“The idea was to illustrate the problem, to show what we've lost. You know, make it visual so people would walk in and be a little shocked, and want to do something about it,” Branfman said at the gallery this week.
Venice became a center of the Los Angeles homelessness crisis during the coronavirus pandemic, when camps sprouted up in residential neighborhoods and along the sands. The nation’s second-largest city also has 46,000 residents who are homeless among the overall population of 4 million people, according to the most recent survey.
The area was a flashpoint because of its visibility as a city landmark — the boardwalk attracts an estimated 10 million visitors per year. A certain edginess always coexisted with a live-and-let-live ethos in the artsy beach community, but the widening of the wealth gap has become increasingly apparent as tech firms moved in and sleek modern homes went up.
As building owners seek to bring in more deep-pocketed renters, longtime residents find themselves dealing with rent increases that overwhelm their finances. Some 80% of low-income Los Angeles renters pay over half their income toward housing costs, according to data released this week by the nonprofit Angeleno Project.
While Los Angeles is on track to meet certain goals for new housing set out by recent ballot measures, “supply is severely behind demand,” the report found.
“Some 3,500 housing units are at high or very high risk of losing their affordability terms, threatening to push more families into homelessness,” said the report. “A significant dip in affordable housing that started in 2022 post-COVID-19 continues to trend downward.”
Upon entering Branfman's exhibit, visitors are confronted by her photos on an enormous and detailed map depicting, block by block, many of the nearly 1,500 rent-controlled units she says have disappeared from the housing market in Venice over two decades. In many instances, the buildings were sold to large corporations that are increasingly buying up properties and jacking up rents.
The map, and much of the exhibit, pins some of the blame for the problem on the Ellis Act, a 1985 California law that gave landlords broad authority to evict tenants in rent-controlled buildings for redevelopment, and then later list the same units at market rates. Branfman said she was “Ellis Acted” when she was evicted from a Venice apartment in 2003.
“Too many tenants are afraid to fight back. And most don't know what their rights are under the law,” she said. And even when tenants do file complaints against landlords, she said, the city very rarely prosecutes the claims.
On the wall opposite the map is a free-verse poem made up of quotes about why many renters are were afraid to take
on landlords, such as: “I don't want any trouble" and "My neighbors aren't documented and they're afraid if they say anything they'll be targeted."
Upstairs there are paintings and mixed-media figurines that the artist Sumaya Evans calls “dignity dolls.” Evans, who was homeless in Venice for years before recently finding housing, said creating art gave her a sense of self-worth when she was living on the streets.
“You get used to being ignored as a homeless woman. People are blind to you when you're outside,” she said. “And so being a part of of a project like this, being a part of a community, is just so healing.”
Branfman and other housing activists are hopeful that change could come with measure that's qualified for the 2024 ballot. The initiative that will go before voters would expand local control by overturning a 28-year-old law that prohibits rent control on single-family homes, condos and rental units that were built after 1995.
After the exhibit closes Saturday, Branfman hopes to find a home for some of the installations at a library or university. Most of it will live virtually on its own Instagram page.
“The rest of it will be on display in my apartment,” she laughs.
Christopher Weber, The Associated Press
Upstairs there are paintings and mixed-media figurines that the artist Sumaya Evans calls “dignity dolls.” Evans, who was homeless in Venice for years before recently finding housing, said creating art gave her a sense of self-worth when she was living on the streets.
“You get used to being ignored as a homeless woman. People are blind to you when you're outside,” she said. “And so being a part of of a project like this, being a part of a community, is just so healing.”
Branfman and other housing activists are hopeful that change could come with measure that's qualified for the 2024 ballot. The initiative that will go before voters would expand local control by overturning a 28-year-old law that prohibits rent control on single-family homes, condos and rental units that were built after 1995.
After the exhibit closes Saturday, Branfman hopes to find a home for some of the installations at a library or university. Most of it will live virtually on its own Instagram page.
“The rest of it will be on display in my apartment,” she laughs.
Christopher Weber, The Associated Press
'Sandwich generation' is in a jam and struggling with caregiving costs, survey shows
Dylan Croll
Sat, November 4, 2023
Meeting basic living expenses is tough enough when you go it alone. But what about when you have someone else to look after?
According to New York Life’s new Wealth Watch Survey, nearly half of the "sandwich generation" – folks with children and elderly family members to look after – report being unable to meet basic living expenses, like food or medical care, in the last year due to caregiving costs.
Of those surveyed, 90% say they’ve made a "lifestyle change or financial decision" due to the cost of caregiving.
The study, which surveyed 1,003 sandwich generation adults between Aug. 31 and Sept. 10, shows how unprepared they are for the expenses of caregiving. It also reveals how they’re adapting.
"People should care because you can be individually financially healthy, have your bills under control, have adequate emergency savings," said Suzanne Schmitt, head of financial wellness at New York Life. "But you're one caregiving event away from having your own finances challenged."
Read more: How much money should I have in an emergency savings account?
Is the so-called sandwich generation under financial siege? (Photo: Getty Creative) (BlessedSelections via Getty Images)
The study also reports a demographic shift in those who make up the Sandwich Generation. Millennials, 27-42 years old, are increasingly becoming caregivers. In 2023, the study reported, 66% of self-reported caregivers were millennials while 23% were Gen Xers. Meanwhile, in 2020, merely 39% of caregivers were millennials and 40% were Gen Xers, between the ages of 43 – 58.
Men are also playing a more active role in caregiving, according to the study. For instance, in 2023, 45% of self-reported caregivers were women while 55% were men. That’s in stark contrast to 2020, when 64% of self-reported caregivers were women and 36% were men.
"Males as a result likely of the pandemic are more willing to admit to providing care and are more apt to be pulled into the act of household caregiving for children and also older loved ones," said Schmitt.
Though more men are becoming caregivers, women still bear a notable financial and emotional load from caregiving. The study found that 72% of men "said they would be able to afford providing the same level of care for their loved ones for at least another year before adjusting their financial plan" while only 54% of women said the same. And the report finds that 50% of women say that caregiving negatively impacts their mental health compared to 39% of men.
Women also continue to spend more hours per week caregiving than men, according to the study.
"Women historically have underreported caregiving, because it's often just seen by many women as something they simply do," Schmitt said. "Picking up prescriptions, managing medications, doing grocery shopping, doing cooking."
Family caregivers are struggling to make ends meet.
Dylan Croll
Sat, November 4, 2023
Meeting basic living expenses is tough enough when you go it alone. But what about when you have someone else to look after?
According to New York Life’s new Wealth Watch Survey, nearly half of the "sandwich generation" – folks with children and elderly family members to look after – report being unable to meet basic living expenses, like food or medical care, in the last year due to caregiving costs.
Of those surveyed, 90% say they’ve made a "lifestyle change or financial decision" due to the cost of caregiving.
The study, which surveyed 1,003 sandwich generation adults between Aug. 31 and Sept. 10, shows how unprepared they are for the expenses of caregiving. It also reveals how they’re adapting.
"People should care because you can be individually financially healthy, have your bills under control, have adequate emergency savings," said Suzanne Schmitt, head of financial wellness at New York Life. "But you're one caregiving event away from having your own finances challenged."
Read more: How much money should I have in an emergency savings account?
Is the so-called sandwich generation under financial siege? (Photo: Getty Creative) (BlessedSelections via Getty Images)
The study also reports a demographic shift in those who make up the Sandwich Generation. Millennials, 27-42 years old, are increasingly becoming caregivers. In 2023, the study reported, 66% of self-reported caregivers were millennials while 23% were Gen Xers. Meanwhile, in 2020, merely 39% of caregivers were millennials and 40% were Gen Xers, between the ages of 43 – 58.
Men are also playing a more active role in caregiving, according to the study. For instance, in 2023, 45% of self-reported caregivers were women while 55% were men. That’s in stark contrast to 2020, when 64% of self-reported caregivers were women and 36% were men.
"Males as a result likely of the pandemic are more willing to admit to providing care and are more apt to be pulled into the act of household caregiving for children and also older loved ones," said Schmitt.
Though more men are becoming caregivers, women still bear a notable financial and emotional load from caregiving. The study found that 72% of men "said they would be able to afford providing the same level of care for their loved ones for at least another year before adjusting their financial plan" while only 54% of women said the same. And the report finds that 50% of women say that caregiving negatively impacts their mental health compared to 39% of men.
Women also continue to spend more hours per week caregiving than men, according to the study.
"Women historically have underreported caregiving, because it's often just seen by many women as something they simply do," Schmitt said. "Picking up prescriptions, managing medications, doing grocery shopping, doing cooking."
Family caregivers are struggling to make ends meet.
(Photo: Getty Creative) (Drazen Zigic via Getty Images)
Meanwhile, the sandwich generation as a whole is struggling to make ends meet as they care for children and the elderly. The study finds that 40% say they "made a financial decision they regret due to mental strain from caregiving." More than 50% say they’ve "made a sacrifice" when it comes to financial security due to caregiving needs. Of those that have made a financial change due to caregiving responsibilities, 34% reported cutting back on expenses, 26% reported contributing less to their emergency savings, and 26% reported taking on more debt.
Read more: Personal loan vs. credit cards: What to use for an emergency?
On the other hand, the sandwich generations’ financial struggles have also made them more far-sighted. For instance, over 3 in 4 agree that "the experience of caring for their aging relative led them to purchase or explore purchasing financial protection products," according to the survey. New York Life also reports that 34% of study respondents plan to pay for future caregiving costs by paying more out of their own budget, 28% say they plan to do so by working overtime in their jobs, 27% say they will do so by spending the retirement savings of those they will be caring for.
The sandwich generation is also saving money for their children to take care of them. According to the study, 42% say they've put aside $43,136.67 on average.
"As a silver lining in all of this we believe that younger people are starting to have those thoughts and internal dialogue and conversations with spouses and partners earlier in life," Schmitt said. "Where they simply have more time to save more runway to consider products and solutions, and ultimately be proactive in putting a plan in place before they find themselves in this care."
Dylan Croll is a Yahoo Finance reporter.
Meanwhile, the sandwich generation as a whole is struggling to make ends meet as they care for children and the elderly. The study finds that 40% say they "made a financial decision they regret due to mental strain from caregiving." More than 50% say they’ve "made a sacrifice" when it comes to financial security due to caregiving needs. Of those that have made a financial change due to caregiving responsibilities, 34% reported cutting back on expenses, 26% reported contributing less to their emergency savings, and 26% reported taking on more debt.
Read more: Personal loan vs. credit cards: What to use for an emergency?
On the other hand, the sandwich generations’ financial struggles have also made them more far-sighted. For instance, over 3 in 4 agree that "the experience of caring for their aging relative led them to purchase or explore purchasing financial protection products," according to the survey. New York Life also reports that 34% of study respondents plan to pay for future caregiving costs by paying more out of their own budget, 28% say they plan to do so by working overtime in their jobs, 27% say they will do so by spending the retirement savings of those they will be caring for.
The sandwich generation is also saving money for their children to take care of them. According to the study, 42% say they've put aside $43,136.67 on average.
"As a silver lining in all of this we believe that younger people are starting to have those thoughts and internal dialogue and conversations with spouses and partners earlier in life," Schmitt said. "Where they simply have more time to save more runway to consider products and solutions, and ultimately be proactive in putting a plan in place before they find themselves in this care."
Dylan Croll is a Yahoo Finance reporter.
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