Our son texted me this morning, asking about a house down the street from them that has been on the market a long time, a couple of months… he asked “is the market really that bad?” For the last couple years, houses were sold almost as soon as the sign went up… what’s happening?
The biggest thing I notice in looking at this week’s stats is the spread between multiple offers, which are at the lowest point since I started tracking this metric last May… and the jump in houses going back on the market (cancelled purchase agreements). The ‘back on the market’ number could be caused by rising interest rates ‘unqualifying’ buyers who previously were approved… cold feet given the current economic climate… as well as other miscellaneous factors including a scary inspection (yes, inspections are back).
Sellers are dropping prices to motivate pending sales (what is happening with that house our son asked me about), and the gap between pending sales last year and this year is widening. New listings aren’t dropping as fast as last year as more sellers are realizing their opportunity to ‘cash in’ is narrowing.
The gap between showings last year over this year is widening. Yes, the market is slowing down.
Back to the listing our son asked about… in looking at it, there are some updates that seem ill-advised, floor plan is less than ideal, and it was priced more for spring market than the current declining market.
Buyers… this is your ideal season… when inventory hasn’t dropped off too much yet but prices are dropping…
All that said, is it a good time to be buying? See the post below from our blog at Keeping Current Matters as well as Leslie’s post yesterday about the cost of waiting…
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
Two Questions Every Homebuyer Should Ask Themselves Right Now
Rising interest rates have begun to slow an overheated housing market as monthly mortgage payments have risen dramatically since the beginning of the year. This is leaving some people who want to purchase a home priced out of the market and others wondering if now is the time to buy one. But this rise in borrowing cost shows no signs of letting up soon.
Economic uncertainty and the volatility of the financial markets are causing mortgage rates to rise. George Ratiu, Senior Economist and Manager of Economic Research at realtor.com, says this:
“While even two months ago rates above 7% may have seemed unthinkable, at the current pace, we can expect rates to surpass that level in the next three months.”
So, is now the right time to buy a home? Anyone thinking about buying a home today should ask themselves two questions:
1. Where Do I Think Home Prices Are Heading?
There are two places to turn to answer this question. First is the consensus of what experts are saying. If you look at what experts are projecting for home prices in 2023, they’re forecasting home price appreciation around 2%. While it’s true some are calling for depreciation, most are calling for appreciation in home values over the next year.
The second spot to turn to for information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. According to the latest release, the experts surveyed are also calling for home price appreciation for the next several years (see graph below):
2. Where Do I Think Interest Rates Are Heading?
Like mentioned above, Ratiu sees mortgage rates rising over the next several months. Another expert agrees. Mark Fleming, Chief Economist at First American, says:
“While mortgage rates are expected to continue to drift higher over the coming months, much of the rapid increase in rates is likely behind us.”
The instability in the world and higher inflation are driving this volatile market, resulting in higher borrowing rates for those looking to buy homes.
Bottom Line
If you’re thinking about buying a home, asking yourself about home prices and mortgage rates will help you make a powerful and confident decision. Experts see both prices and rates rising in the future. The alternative is to rent, but rents are also increasing. That may mean buying a home makes more sense than renting.
