By CHUCK GREEN
As the average mortgage rates decline and markets slow in parts of the country that were red-hot during the pandemic, we at The Mortgage Note decided to ask who is currently in favor during negotiations – the buyer or the seller?
It seems that the current consensus on the ground is that there are benefits to being either.
Aaron Kozikowski is a loan officer at Ross Mortgage Corporation. The company is headquartered in Troy, Michigan, and serves customers in Michigan, Kentucky, Florida, and Virginia.
Kozikowski said “in this market, we’ve been seeing homes sit on the market longer, which allows buyers to take their time instead of having to put in an offer immediately. Sellers are also feeling more pressure to consider lower offers and give concessions to closing costs.”
When it comes down to the decision-making process for buyers in this market, Kozikowski said they should think about what aspects of a home are most important to them and create a checklist.
“It will usually be difficult for a home to check off every single item on this list, but having more time to make a decision will allow them to explore more options,” Kozikowski said.
Sellers can still move their houses quickly if they price them reasonably, Kozikowski said.
“Sellers should realize that they’re still in a relatively good position in this market,” Kozikowski said. “Their listing might not sell within a day like they did last summer, but they’re still moving quick. A couple weeks on the market is still a very short amount of time. Since buyers are much less willing to cover an appraisal gap, it’s important for them to come up with an accurate and reasonable price for their home.”
Will pent-up demand place the market in a seller’s favor come spring?
“Rates have started to stabilize and are poised to come back down,” Kozikowski said. “The fed has been hiking rates in an effort to curb inflation and their efforts are starting to pay off. As inflation continues to ease so will interest rates. However, with rates falling, we expect to see an increase in buyers coming back to the market. With no signs of an increase in inventory, this increase in demand is likely to shift the market favorably for sellers.”
As economists predicted, the 30-year fixed rate fell again last week, moving downward to just over 6%.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.09%, down from 6.13% the week prior.
A year ago at this time, the 30-year FRM averaged 3.55%.
“Mortgage rates inched down again, with the 30-year fixed-rate down nearly a full point from November, when it peaked at just over 7%,” said Sam Khater, Freddie Mac’s Chief Economist.
That may be good news for buyers.
“According to Freddie Mac research, this one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” Khater said.
The potential for a buyer’s market for 2023 is supported by a Zillow Home Price Expectations Survey, in which industry leaders like economics and housing experts are polled.
More than half – 56% – of the panel “expects a significant shift in buyers’ favor.” On top of that, in areas like Austin, Texas, which has seen price growth and competition, the market’s expected to cool the fastest.
According to George Ratiu, senior economist and manager of economic research at Realtor.com, their January housing report showed an increase in the number of homes for sale.
With homes lingering longer on listing platforms, median prices are rising at a slower yearly pace, and are down 11% from last summer’s peak, Ratiu said in a weekly housing market update published on Friday.
Anthony Marguleas, founder and broker at Amalfi Estates in Pacific Palisades, California, told The Mortgage Note he is witnessing the shift to a buyer’s market in the affluent community.
He said buyers are in a better negotiating position because they have more time to make decisions.
“Buyers are in less of a rush because prices are softening, and homes are on the market longer,” Marguleas said.
When prices were appreciating every month, “there was a real sense of urgency. Now it’s the opposite. Buyers will look for more favorable terms as well as prices.”
“As they get educated that today’s market is much different than in 2021 and 2022, sellers are starting to be more realistic,” Marguleas said.
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As economists predicted, the 30-year fixed rate fell again this week, moving closer to 6%. https://t.co/ZymQa0HJBL
— The Mortgage Note (@TheMortgageNote) February 3, 2023
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