Realtors are confirming what housing data is starting to show. More homebuyers are coming out of their self-imposed hibernation.
For the week ended Jan. 13, the Mortgage Bankers Association (MBA) survey showed that the number of mortgage applications for home purchases increased 25% from the previous week. Housing sentiment rose at the end of last year, according to Fannie Mae. Also, according to industry research, the homebuilder reported he saw an increase in buyer traffic in January, his first increase since December 2021.
These buyers hope to be rewarded from a more lucrative market before the spring buying season attracts more competition.
Jeff Reynolds, Compass broker and founder of UrbanCondoSpaces.com, told Yahoo Finance: “They wanted to see what the market was going to look like. With the market stable and interest rates down, they wanted to be one step ahead of what would inevitably be the bottom for real estate.”
“call people back”
The decline in mortgage rates in recent weeks is just a short distance from the record rise recorded last year. Last week, the average interest rate on a 30-year fixed mortgage (the most commonly used mortgage to buy) approached 7% to 6%, fitting more buyers’ budgets.
“The interest rate is better for first-time buyers.
At the same time, home prices are also softening, with the median list price in December falling to $400,000, down 11.1% from its June peak of $449,000, according to Redfin.
“Most of the activity is from new buyers,” says Reynolds. “In our downtown Seattle microclimate, most of the activities are really affordable. brought about by taking advantage of the situation, probably for the first time.”
Returning buyers are also emboldened, knowing that the remaining sellers in the market are open to negotiation.
“In 2022, buyers set the market by bidding, which pushed prices up and basically forced them to pay to win,” said Downs. “Now, instead of waiting for listing prices to drop, buyers are offering big discounts and letting sellers make decisions. And it seems to be working.”
At least 16.6% of homes sold in December saw price cuts, up from 7.1% a year ago, according to Realtor.com data. Even homebuilders are squishy about prices.
One of Monte Miner’s clients took $15,000 off a new home that was originally priced at $409,000, according to realtors at Ironwood Fine Properties in Arizona.
“Buyers are back, but they’re picking deals. Let’s say a house is listed for $400,000 — a lot of the offers coming in are under that amount,” Miner says. “Pricing expectations for some sellers are as stuck in the past as they were three months ago.
Not only are some people getting significant price cuts, they are also seeking concessions from sellers to further alleviate the burden of still-high home prices.
For example, data from the National Association of Home Builders shows that at least 35% of builders slashed home prices in December. Another 62% of builders continue to use incentives to attract buyers, such as rate buydowns and payment points. About 42% of homes sold in the last three months of 2022 included seller concessions such as cash for repairs or closing costs, according to Redfin.
“If we don’t have enough money for the closing costs, the sellers are willing to pay for it,” Downs said.
timing is everything
Now that interest rates are finally inching down, Downes says, it could be the perfect time to buy a home before the spring season hits full swing. By preparing for a pre-approval, setting a budget, and talking to a real estate professional, you are more likely to negotiate a better deal when you close.
According to Miner, entering the market before competition floods in can be a good move if you want to negotiate terms.
“From what I’ve seen, it feels like the bottom is here,” Minor said.
Gabriella is a Personal Finance Reporter at Yahoo Finance. follow her on her twitter @__gabriellacruz.
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