By KIMBERLEY HAAS
The housing market traditionally cools during the holiday season as people focus on family and friends but industry leaders say it is a good time for potential sellers and buyers to weigh their options.
After mortgage rates recently surged above 7%, real estate activity and consumer sentiment took a nosedive. Home delistings hit a record high in November as sellers and buyers pulled out of the market, according to journalists Lily Katz and Ben Walzer at Redfin.
Markets where home prices skyrocketed during the pandemic are now cooling the fastest. In Sacramento, Calif., an average of 3.6% of active listings were delisted per week during the 12 weeks ending on November 27, up 1.6 percentage points from one year earlier.
“I’ve had many sellers cancel listings,” David Palmer, a Redfin real estate agent in Seattle, told Katz and Walzer. “Usually, sellers who pull their listings off the market in the fall do it with the intention of listing again in the spring. But with the word `recession’ out there, there’s not as much optimism about spring being a better market. Now people are talking about trying again in another year or two once the economy improves.”
Although some sellers will hold off as Palmer suggests, others who are watching the market say there could be a springtime flood of new listings.
They include people with growing families who need a bigger house, seniors who are moving for health-related reasons, and employees relocating for work.
Levin pointed to data from the Survey of Working Arrangements and Attitudes, which shows that by June of 2022, only about 15% of full-time employees were fully remote.
“That’s still much higher than anyone ever imagined before the pandemic, but it still leaves 85% who may have to sell their homes if they get fired or leave their job for a new one in another part of the country,” Levin wrote.
In addition, mortgage rates have fallen in the last few weeks.
Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors released a statement on Thursday saying that housing affordability rose about 8% in the last four weeks as mortgage rates moved downward and are heading toward 6%.
“If inflation continues to slow down, mortgage rates may stabilize near 6% in 2023,” Evangelou said.
With mortgage rates at or about 6% housing will become more affordable for many buyers, Evangelou said.
“While the typical family cannot currently afford to buy a median-priced home as the qualifying income exceeds earned income, housing will become affordable again for Americans if rates hover near 6%. In this scenario, the typical family will earn about $1,000 more than the income needed to purchase a mid-priced home. With more buyers back in the market, the housing market may turn around at the beginning of the new year,” Evangelou said.
Freddie’s Primary Mortgage Market Survey released on Thursday found that the 30-year fixed-rate mortgage averaged 6.33% last week, down from 6.49% the week prior.
Over the last four weeks, mortgage rates have declined three-quarters of a point, Freddie Mac Chief Economist Sam Khater said in a statement.
A year ago at this time, the 30-year FRM averaged 3.10 percent, according to a press release.
The 15-year fixed-rate mortgage fell from 5.76% to 5.67%. A year ago, it averaged 2.38%.
Zillow Home Loans Senior Economist Matthew Speakman also released a statement.
Speakman said data released on Wednesday showed labor costs were much cheaper than expected in the year’s third quarter, something the market may be interpreting as another sign of waning inflation.
“Bond yields and mortgage rates fell in response. All told, it was a good week for mortgage rates, but more volatility looms around the corner,” Speakman said.
Speakman said the inflation dynamic remains investors’ chief focus and mortgage rates barely budged in response to the monthly jobs report, a release that usually tends to move markets.
“It’s unlikely that this mindset will change before next week – when another inflation update and statement from Chair Powell will be shared – but recent rate movements indicate that markets are evaluating their positions as those important releases approach,” Speakman said.
“But it’s not over yet. Next Tuesday’s inflation report is the 500-pound gorilla in the room, and the Fed’s press conference the next day will bring us much more clarity on how soon and how quickly we can expect mortgage rates to come down in the new year,” Marr said.
So how do potential sellers make the most of the current market?
People who need to sell their current home have to be motivated because many buyers start their shopping online and they are savvy.
Analysts at Point2, an international real estate search portal, say that sellers have just seconds to grab the attention of home seekers online so keywords help.
They examined 52 million words from over 730,000 property descriptions across the country and ranked the top 100 most popular keywords, most frequently used features and amenities, and comprised breakdowns by price range and region.
Sellers with garages and ample parking should highlight those amenities as accessible parking has gradually become the most in-demand requirement for home-seekers, their findings show.
Outdoor amenities such as a pool are important to buyers in the South, while “full bath” is the most popular term used for listings in the Northeast.
In the luxury market, “Chef’s kitchen,” “hot tub,” and “water views” are popular, along with “storage” and “open floor plan.”
The experts at HGTV say selling during the holidays is not a bad idea because buyers are more serious, they have more time to house hunt, there are fewer homes for sale, industry professionals are more available, and homes can be their most attractive when decked out in lights and garland.
Their tips for sellers include cleaning and staging well, creating a cozy vibe, using simple string lighting to play up a home’s architecture, and using nondenominational decorations such as nutcrackers and mistletoe.
Sellers who know they need renovations on their property should try to avoid selling “as is.”
Leaders at a pre-sale renovation company in Irvine, Calif., say renovated homes bring in $186,000 more in net profit than those sold “as is,” and sell faster.
Revive and Keyes plan to maximize home equity by guiding sellers through pre-sale renovations. These changes may boost the home’s equity by 15-20%, according to a press release.
Buyers might benefit from the lack of competition this holiday season and moving into 2023.
Zillow Senior Economist Nicole Bachaud delivered an opening keynote speech at the National Association of Real Estate Editors conference in October. She was talking about home affordability and the 2023 economy.
Bachaud noted a silver lining for potential homebuyers.
“Buyers are in a better negotiating position. They have more time to make decisions and they also have more negotiating power to get those prices into a more favorable position. So for buyers who can afford to stay in the market right now, this is a really great time to buy. There’s less competition, there’s more opportunity, and there’s more power. That’s not something we have seen for buyers in the past several years,” Bachaud said.
According to the Knock Buyer-Seller Market Index, which analyzes key housing market metrics to measure the degree to which the nation’s 100 largest markets favor home buyers or sellers, the national housing market entered neutral territory – not favoring sellers or buyers – in October.
Twenty-six of the top 100 markets are forecast to emerge as buyers’ markets by October 2023, according to their analysis.
Buyers could benefit from the competition for their loans. Lenders are going to great lengths to secure new customers.
Lenders One Cooperative is opening branch locations at select Walmart stores in seven states.
President Justin Demola said in a recent interview with The Mortgage Note that opening branches inside Walmart stores makes sense for their members and customers who will have access to lending services in the same place they shop.
“Walmart is an interesting opportunity for us and our members,” Demola said. “The timing has lined up nicely. This project started almost two years ago when the mortgage market was buzzing. Interest rates were super low and the volume was setting records. Fast forward to the first quarter of this year when rates started increasing and buying started slowing down, it positioned us very nicely for our members to have another outlet to originate loans.”
The first Walmart store branch Lenders One location opened on Oct. 7 in Newton, NJ, and is powered by Family First Funding, LLC.
In addition to New Jersey, Lenders One members are opening locations at Walmarts in Florida, California, Ohio, South Carolina, and Texas, according to a press release.
Called Fairway Community Access, the program will offer qualifying first-timer homeowners up to $7,000 toward the down payment and $500 in the form of an appraisal credit, should appraisal be necessary.
Buyers in Atlanta, Baltimore, Chicago, Detroit, Memphis, and Philadelphia will be eligible for Fairway Community Access. They must currently reside in the designated community, have no ownership interest in any other property, and the home must be their primary residence.
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