Finance News
Homebuyers are backing out of deals at a record rate as prices march higher
DFW Housing & macro econ analyst Amy Nixon joins ‘Making Money’ to discuss the impact of big banks investing in residential real estate.
Would-be homebuyers are getting a case of cold feet as they confront still elevated mortgage rates and record-high housing prices.
New findings published by Redfin show that a growing number of buyers are backing out of deals to buy a house at the last minute because buying a home is more expensive than ever. About 56,000 home purchases were canceled in June – about 15% of homes that went under contract – the highest percentage of any June on record.
The median home sale price rose 4% in June to $442,525, the highest level on record. At the same time, the average 30-year mortgage rate was about 6.92%, more than double the pandemic-era lows.
HOME PRICES SMASHED ANOTHER RECORD IN JUNE AS SALES SLUMP
“Buyers are getting more and more selective,” said Julie Zubiate, a Redfin real estate agent near San Francisco. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list.”
Homes in the Issaquah Highlands area of Issaquah, Washington on Tuesday, April 16, 2024. (Photographer: David Ryder/Bloomberg via Getty Images / Getty Images)
Still, there are some signs that home prices may soon fall.
The Redfin report showed that one in five homes for sale saw a price cut, the highest level of any June on record. It marks a notable increase from the 14.4% pace seen one year ago and is just shy of the 21.7% record set in October 2022.
There are a number of driving forces behind the affordability crisis.
MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU
Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.
Higher mortgage rates over the past three years have also created a “golden handcuff” effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.
A home available for sale is shown on May 22, 2024 in Austin, Texas. (Photo by Brandon Bell/Getty Images / Getty Images)
Economists predict that mortgage rates will remain elevated for most of 2024 and that they will only begin to fall once the Federal Reserve starts cutting rates. Even then, rates are unlikely to return to the lows seen during the pandemic, with investors predicting just one or two rate reductions this year.
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“Some prospective buyers are simply waiting for mortgage rates to come down after the Federal Reserve cuts rates, most likely in September,” said Lisa Sturtevant, Bright MLS chief economist. “With inflation cooling and the job market still solid, rate cuts are now almost a foregone conclusion, which means those buyers who can wait are doing so.”
Most homeowners say they are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to a Zillow survey. Currently, about 80% of mortgage holders have a rate below 5%.
Bespoke Investment Group co-founder Paul Hickey breaks down the current volatility in the market and discusses his current favorite investment opportunities on ‘Making Money.’
JPMorgan CEO Jamie Dimon still isn’t a fan of Bitcoin but he’s not letting his personal feelings get in the way of business at the bank.
“When I look at the Bitcoin universe, the leverage in the system, the misuse,” he said at the company’s annual investor day Monday in New York. Noting that bad actors can use it for sex trafficking and terrorism.
“I am not a fan of it. We are going to allow you to buy it. And we’re not going to custody it. We’re going to do is put it on statements for clients. So, you know, I don’t think we should smoke, but I defend your right to smoke. I defend your right to buy Bitcoin, go at it”, he added.
JPMorgan Chase CEO Jamie Dimon Speaks at Investor Day 5/19
At JPMorgan’s Investor Day, Dimon said the bank will now allow clients to buy Bitcoin but that policy hasn’t changed his view on the cryptocurrency. (JP Morgan)
Bitcoin, the largest crypto by market value, is just shy of its all-time high of $106,734.51 reached last year.
DIMON SOUNDS OFF ON HIGH MORTGAGE RATES, LAYS BLAME
Dimon has long been a critic of Bitcoin, including these remarks from 2021:
“I personally think that Bitcoin is worthless,” Dimon said while speaking at a virtual event hosted by the Institute of International Finance. “But I don’t want to be a spokesman for that, I don’t care. It makes no difference to me.” Dimon has also likened the crypto to “fools gold.”
Shares of JPMorgan Chase are up over 10% outperforming the S&P 500 which is flat for the year.
In January 2024, the Securities and Exchange Commission greenlighted the first Bitcoin exchange-traded fund, prompting a slew of firms to launch their own, making the asset class more accessible for both institutional and retail investors.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| IBIT | ISHARES BITCOIN TRUST – USD ACC | 60.66 | +0.68 | +1.13% |
| FBTC | FIDELITY WISE ORIGIN BITCOIN FUND – USD ACC | 93.14 | +0.98 | +1.06% |
| GBTC | GRAYSCALE BITCOIN TRUST ETF – USD ACC | 84.12 | +0.88 | +1.06% |
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iShares Bitcoin Trust ETF, Fidelity Wise Origin Bitcoin ETF and Grayscale Bitcoin Trust ETF are currently the largest funds by assets under management, as tracked by ETF.com.
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Hooters CEO Sal Melilli joins ‘Fox & Friends’ to discuss plans to return the brand to its roots as a ‘neighborhood restaurant.’
Italian restaurant chain Bertucci’s is closing more locations after filing for bankruptcy again to mitigate losses.
The Massachusetts-based business, which has locations along the East Coast and is best known for its brick oven pizza and pasta, filed for Chapter 11 bankruptcy protection in Florida last week. It marked the chain’s third bankruptcy since 2018.
Bertucci’s also closed seven of its underperforming locations – five in Massachusetts, one in Rhode Island and one in Maryland. It now operates 15 restaurant locations in six states, according to court documents.
RESTAURANT CHAIN BERTUCCI’S FILES FOR BANKRUPTCY PROTECTION
Italian restaurant chain Bertucci’s has filed for bankruptcy for the third time since 2018. It has also closed seven restaurants to mitigate losses, according to an April 24 bankruptcy filing. (WFXT)
The company cited the “deterioration” of the U.S. economy and “lack of consumer demand for legacy casual-dining brands” as reasons why the restaurant chain has been operating at a loss, according to the filing.
FAST-FOOD CHAIN CLOSING UP TO 200 ‘UNDERPERFORMING’ LOCATIONS
“With losses accumulating, inflationary pressures still high, and industry headwinds gusting, the proverbial final straw fell on [Bertucci’s] this year as the world saw food costs soar, consumer spending slow, and an uncertain global economy falling in (and out) of decline,” as stated in the bankruptcy documents.
Bertucci’s has assets and liabilities between $10 million and $50 million, according to the filing.
TGI FRIDAYS’ US FOOTPRINT HAS SHRUNK TO 85 RESTAURANTS ACROSS THE COUNTRY
The restaurant chain hopes bankruptcy will provide the business with a “breathing spell” so it can “determine the best path forward and formulate an overall reorganizational plan,” it said in the filing.
In April 2018, Bertucci’s filed for Chapter 11 bankruptcy protection and closed 15 restaurants. In December 2022, amid challenges caused by the COVID-19 pandemic like the closure of restaurants and inflation, it declared bankruptcy for a second time and streamlined operations down to 23 locations, according to the filing.
Bertucci’s previously filed for bankruptcy in 2018 and 2022. (WFXT)
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Bertucci’s did not respond to FOX Business’ request for comment.
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