Let us hope.
I’ve been asking agents for months if we are going to see a correction or decrease on pricing in the next couple of years. They all looked at me like I was being offensive and argued that it would never happen.
Every agent and home inspector are telling me how slow it is, but apparently, I know some pretty good agents, because while slower than average, I am fairly busy even here in December.
way to go Lon!
Just read this in The Business Journals.
High interest rates are weighing heavily on homebuyers, but they also are prompting a record percentage of sellers to drop their prices.
That’s according to an analysis of pricing data from Redfin Corp., which found 20.8% of active listings nationally had a price drop in October.
Nationally, the weekly average for price drops was nearly 7% for the four weeks ended Oct. 29. That’s the highest point on record, according to Redfin.
Interest rates aren’t the only factor in the drops, but they are compounding the affordability equation at time when many sellers are pricing aggressively.
“Some sellers are pricing too high because they have FOMO after their neighbor’s house sold well over asking price two years ago,” said Seattle Redfin Premier agent Patrick Beringer. “While low inventory is driving some competition, and relatively affordable homes in popular neighborhoods are still selling fast, they’re getting two or three offers as opposed to 20 offers at the height of the market."
With interest rates hovering between 7.5% and 8%, buyers also simply don’t have the budget they once did. Even with a higher percentage of sellers cutting their prices, median sales prices remain up 3% compared to a year ago, according to Redfin.
It’s a dynamic that’s shaping the industry in multiple ways.
Homebuilders are pulling out all the stops to get deals across the finish line, often by providing incentives. One of the leading incentives? Mortgage-rate buydowns — although some say those buydowns could pose a significant challenge for homebuilders if rates decline quickly.
Still, as Ashley Fahey of The National Observer: Real Estate notes, the National Association of Home Builders said higher interest rates are affecting builders’ ability to move forward with their projects, as the number of single-family homes under construction in September was 674,000, about a 15% decline from a year ago.
The affordability crisis also is sparking demand in the build-to-rent sector — particularly among young buyers who have been priced out of the market.
According to the Mortgage Bankers Association, applications on average are down 22% nationally.
“Mortgage rates are higher than they’ve been in the past roughly 30 years,” Katherine Bosken, North Carolina Commissioner of Banks, recently told Lauren Ohnesorge of the Triangle Business Journal. “I would hate to think they were going to go as high as they got in the early '80s, and I don’t envy millennials trying to buy homes at this point.”
The national housing picture
Cincinnati (55.2%), Indianapolis (51.3%) and Denver (46.5%) had the highest percentage of listed homes with a price drop in October.
Additionally, pending home sales declined in all but three of the nation’s 100 largest metro areas: Austin, Texas; Tampa, Florida; and Las Vegas.
Despite the increase in price drops in October, the national median sales price is still up 3.4% compared to 2022 — although some formerly high-flying Sunbelt markets have seen declines. That includes West Palm Beach, Florida (10.6% decline), Austin (6% decline) and Fort Worth, Texas (3% decline).
Conversely, cities with double-digit increases in median home sale prices include Newark, New Jersey; San Jose, California; and Columbus, Ohio.
Redfin said growth in sale prices may slow in the coming months as it starts to reflect sales that went under contract as mortgage rates hit 8% in October.
This has been my concern all along. The houses around here that have had multiple offers and sold quickly over the last few years are purchased by a lot of first-time homebuyers. They trend with a lot of these homes is to be relisted within the first five years as they upgrade to their second. Are they going to be upside down when they go to sell? If this does happen, they are going to be upset with everyone involved in the transaction. This includes the home inspector.
Years ago, I worked for a company where the plumbing division did a ton of new townhomes. The market was hot for these as they were quickly snatched up by young professionals. They were going up so fast that the market quickly got saturated. Within two years, the brand-new units in the same complex were being sold for less than what they were when the originals were purchased. Sellers were losing 10’s of thousands just to unload them.
Very possible, That’s the chances you take when purchasing a home. There are many factors that determine what the market will do in the future. It would be nice to have a crystal ball!
Happy for you Lon. I appear to be in the same situation as you, although December has just started, I have booked 4 inspections and another coming this week.
While slower than average I appear to be chugging along doing about 70% of my usual bookings. As well, I am doing more auxiliary inspections.