66% of Homebuyers Waiting for Rates to Drop
Hearing a lot lately about how homebuyers are waiting until rates drop to buy. According to U.S. News in April 2023, that number is 66% of homebuyers! Sure, you could do that. But before you put the emergency brake on your homeownership goals, take a real look at the numbers and understand what waiting means in real terms. This post is a start, but connect with a lender, shore up your budget, save for downpayment. If and when your situation makes sense to buy, you should think about going for it. Waiting may make sense for you. But it also may actually cost you money on a monthly basis and long-term basis. It can also cost you in negotiation power. When there is intense buyer competition, buyers have to give up more just to get their offer accepted and it becomes harder to negotiate along the way if something comes up with inspection, for example. So, don't assume a lower rate will equal a better situation for you as a buyer. Happy to walk and talk you through some scenarios if you're curious and can connect you to a lender or two to chat with about your particulat situation. Knowledge is power.
Read MoreCue music...time for a tiny happy dance?
Is it time for a little happy dance? Are we seeing a BLIP or a TREND?? Only time will tell, but the market ticked up a bit over the last 2 weeks. Mortgage applications were up more than 25% (one source said 36%) and the data shows buyers were out and about. Overall numbers are still lower than last year, but activity is increasing noticeably from the doldrums of December. It’s still a great time to be a buyer, if you are pre-approved and can handle your mortgage payment at current rates. Buyers are able to negotiate on price and inspection items and can sometimes also ask for seller concessions to help pay for an interest rate buy down or cover closing costs! The talk is that rates may have peaked. If this is true, rates are likely to go down, which will bring out even more buyers and increase competition, and possibly home prices. According to economist Elliot Eisenberg, an economic slowdown (maybe even a shallow and short recession) is likely sometime in 2023. This usually brings lower rates and higher home prices. NAR’s Chief Economist, Lawrence Yun mentioned that a mortgage drop from 7% to 6% would mean 5% more households could afford to jump into the buying pool. “In this scenario, the qualifying income to purchase the mid-priced home drops by more than $15,000 to $144,000 from $160,000. This could bring more buyers back to the market boosting demand for housing and increasing market competition.” If you’re still thinking about buying, don’t wait. Now might be the time to capitalize on less competition and softened prices. If you’re a seller, reach out. There are seasonal factors, in addition to this current data, that we can discuss related to your particular situation to help you determine if listing sooner rather than later makes strategic sense. In the meantime, enjoy the data below. EL PASO COUNTY Data from December - note that it doesn't yet capture the increased activity we've seen in January. It will be important to consider next month's report in comparison to this one to understand where things may be heading. Currently, the data points to a buyers market with listings and days of market up considerably (from historically low levels, so an increase is good news) and average price down slightly (3%) and total number of homes also down, contributing to more active listings. DENVER METRO Below is a summary chart of data as of 1/19/23 by housing price segment. This data is for detached, single family homes. If you’re interested in attached homes, we can dig into that too just let us know! Further, we are here to interpret this data with you to help you understand how this relates to you. All of this helps us understand the potential advantages to buying now, what to expect when selling a home in this market and potentially when the best time to list might be. Data points to the market picking up in recent weeks from the sluggish market activity in late 2022. Buyers looking for a deal should take special note of these numbers. If we see multiple weeks of this activity, that may mean this super buyer-friendly market may be reversing. Notable data and changes from 2 weeks ago for Metro Denver: Months of inventory is still super low! All but the $1.5-2mil price point have 1.5 months OR LESS! Average showings per week doubled in almost all price points Median Days on Market for all of Metro Denver is 36 and went down by 6-19 days in almost all price points and basically remained flat in the $1-1.5million range The percentage of sellers making price reductions went down for all price ranges and the odds of going under contract within 30 days increased SUBSTANTIALLY for all We have also included information about notable changes from 2 weeks ago for each price segment below: **Up to $500,000** Average showings per week doubled to 4/week, but showings to contract increased to 17 days – buyers are viewing more homes before making an offer Median days on market are down by a week and a half to 27 from 38, anything sitting for longer than 38 days is ripe for a price change Only 29% vs 49.5% of sellers made a price reduction before going under contract – either sellers are getting better at pricing, or the increased competition is having an impact Odds of being under contract within 30 days increased from 43.4% to 59.9% - those are good odds if you’re a seller in this price range. **$500,000-$1mil** Average showings per week more than doubled from 1.2 to 2.6/week – there are more buyers looking at houses Median days on market are down by about 30% to 41 from 60, this has sped up the sales cycle in this price point by almost 3 weeks. Buyers no longer have the luxury of sitting and waiting to long to offer on a property they like. Only 50% vs 65.1% of sellers made a price reduction before going under contract – this is great news for sellers as the market tips a bit more in their favor Odds of being under contract within 30 days increased from 33% to 50% - those are good odds if you’re a seller in this price range. **$1-1.5mil** Average showings per week more than doubled from 1 to 2.6/week – there are more buyers looking at houses, even at this higher price point. Only 44% vs 61% of sellers made a price reduction before going under contract – this is a big change and great news for sellers as the market tips a bit more in their favor Odds of being under contract within 30 days increased from 27.3% to 44.6% - signs of a strengthening market **$1.5-2.0mil** Average showings per week almost doubled from .7 to 1.3/week – even luxury buyers are coming out of the woodwork This price point had the largest drop of Median Days on market from 72 to 36 -- that's a 50% drop! Only 50% vs 65.1% of sellers made a price reduction before going under contract – this is great news for sellers as the market tips a bit more in their favor Odds of being under contract within 30 days doubled! From 14.2% to 28.8% - still low, but the increase in odds is favorable to sellers and something to watch out for for buyers looking for a deal. As always, reach out with any follow-up questions you might have about buying or selling. You can also read blogs about Real Estate, including (YAY!) more data, on our website (links to the right). Best,Jami & JodiJ2 Home Team
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