In its July monthly survey of real estate agents from around the US – and regional analysis from 40 markets – shows that buyers are generally becoming tepid if not cautious amid historically low interest rates. After a June pull-back in home buyer traffic, July failed to provide a bounce as those actively looking to purchase a house dropped. There are numerous concerns – home prices are too high, for instance – but the real concern for some agents is how quickly demand disappeared.
Regionally, the report shows a mixed bag. The Pacific Northwest slowed, coming in-line with national averages, while certain regions inside Texas and the Southwest improved, but the Northeast, Midwest and California all worsened.
Macro real estate concerns across the country
In July seven of the 40 markets Credit Suisse real estate analysts Michael Dahl, Matthew Bouley and Anthony Trainor witnessed lighter than expected traffic.
“Incrementally, buyers seemed more resistant to higher home prices with some willing to move to the sidelines,” they noted, citing hesitation due to economic concerns. “Quite a few agents were surprised how quickly demand faded through the Summer, suggesting some payback following stronger Spring trends.”
The macro trends were not entirely negative. “Many agents noted that favorable mortgage rates continue to support demand, though still not much of an urgency factor.”
Trends were mixed in geography as well as among different demographic groups. Traffic trends among “high-end” properties, which had seen strong up markets during the periods of quantitative easing, are starting to slow. But traffic patterns point to “healthy demand” at lower price points.
Factors can vary greatly depending on regional differences as well.
Regional pockets of strength and weakness in previously hot Portland, Seattle, New York and California
The super hot, hip markets of Portland, Seattle and New York experienced sharp traffic declines, the report noted. California also experienced declines in the southern part of the state.
In Portland home inventories rose with agents reporting comments such as “Seems like the whole city went on vacation as far as showings. Traffic is just beginning to pick up.”
Nearly 174 miles north in Seattle a lack of motivation is heard among buyers as “prices (are) too high,” the report said, noting “Buyers see no reason to hurry due to steady interest rates. Also unwilling to accept older homes that are not fully updated.”
Further south along the coast, California traffic was pulled lower by readings in Los Angeles and San Diego, while the northern part of the state in tech-heavy San Francisco moved higher.
In New York City and Northern New Jersey, the problems heard among real estate agents include “Lack of quality inventory,” or “Higher asking prices are causing buyer hesitation as inventory builds.”
Buyer weaker on Flordia coast than in Orlando, Las Vegas and Minneapolis
Within the “Lone Star” state, Austin, Texas traffic was down with Houston remaining “challenged.” These rough patches were offset by improvement in San Antonio and Dallas. “Tremendous demand. Low interest rates. Fantastic local economy,” was the buzz among San Antonio real estate agents.
Florida markets remain depressed, the report noted, led by weakness in key metropolitan areas such as Miami, Fort Meyers and Sarasota. Off the coast in Orlando demand held steady. “Sales activity is down partly due to time of year, many on vacation, and less inventory on the market,” the report noted, pointing to people currently selling homes “up north.”
Two notable winners include Las Vegas and Minneapolis, where real estate demand continues to power ahead.
In Las Vegas, a previously hot real estate market leading up the to the financial crisis, agents noted an air of urgency among buyers. “Low interest rates won’t last forever, and some are beginning to figure this out,” the report noted, pointing to an influx of buyers form California.
Likewise, Minneapolis saw surprising increases in buyer traffic with “serious buyers out looking” amid “still steady traffic.”