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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 92 J O U R N A L September 2023 In all four regions, more than half of online shopping traffic went to homes outside of the shoppers' metro areas. Only the Western region had this level of outside shopping interest three years ago. Chicago has been the top out-of-state destination for home shoppers based in San Francisco for the past four quarters, likely because of its relatively affordable housing, similar tech/industry structure and easy access to transportation. Similarly, Dallas serves as the metro pair for Chicago for shoppers seeking tech jobs, easy air transpor- tation, and warmer weather. "Housing affordability isn't likely to improve anytime soon, so it's not surprising to see that Americans are on the move and increasingly searching for homes in more affordable areas of the country where they can stretch their housing dollars further," said Jiayi Xu, Realtor.com Economist. "Sellers are much more likely to see interest from out-of-towners than in years past, and from where that interest is coming might be the most surprising." REAL ESTATE MARKET HITS ALL- TIME HIGH, NOW VALUED AT $47 TRILLION A ccording to a new report from Redfin, the total worth of all U.S. homes hit a record $46.8 trillion in June 2023 topping the previous high of $46.6 trillion set one year ago. Over the last year, the market picked up 0.4%, or $166.2 billion in value, and 19.1%, or $7.5 trillion, from two years prior. The housing market has now offset the $2.9 trillion decline in value—set off by rising mortgage rates—that occurred from June 2022 through February 2023. "The dominance of the 30-year fixed rate mortgage in America is propping up home values," Redfin Economics Research Lead Chen Zhao said. "Tons of homeowners scored an incredible deal during the pandemic: a 3% mortgage rate for the remainder of their 30-year loan. Now they're staying put because moving would mean taking on a rate that's twice as high. This means buyers who are in the market now are duking it out for a very small pool of homes, preventing home values from plunging." Nearly nine in 10 homeowners now have a mortgage with a rate under 6%, which is nearly a full percentage point below today's average rate of 6.96%. As a result, just 1% of homes have changed hands this year, the lowest number in at least a decade. The number of homes for sales in the United States dropped 15% year over year to an all-time low in June, the biggest annual decline in nearly two years. Of the 32 major metropolitan areas where average home values declined from a year earlier in June, 11 of those cities are in Texas. The value of homes in Austin, Texas, fell 9.6% year over year to $388.1 billion in June—a larger decline than any other metro. Next came Oakland, California (-8.7%), Seat- tle (-8.1%), San Francisco (-7.8%), and Los An- geles (-6.6%). Rounding out the top 10 are San Jose, California, Phoenix, Oxnard, California, Las Vegas, and Sacramento, California. The pricey West Coast markets have experienced outsized declines because they were among the first to be one of the most expensive markets in the United States at the outset of the pandemic. Scores of remote workers left these areas during the pandemic in search of more space and better bang for their buck, contributing to the drop in value. Additionally, the West Coast has been hit hard by tech layoffs. Many buyers in pricey coastal markets also got sticker shock after seeing the impact of elevated mortgage rates on paper; in a metro like San Francisco, a higher rate can equate to a monthly housing bill that's thousands of dollars more expen- sive. Situations are similar in other pandemic boomtowns as home values are overheated, leaving those who want to get into the market "Tons of homeowners scored an incredible deal during the pandemic: a 3% mortgage rate for the remainder of their 30- year loan. Now they're staying put because moving would mean taking on a rate that's twice as high. This means buyers who are in the market now are duking it out for a very small pool of homes, preventing home values from plunging." —Chen Zhao, Economics Research Lead, Redfin