Holy cow! The difference between this summer and last summer in the real estate and mortgage business is amazing. Last summer, folks were binge-watching TV series on Netflix and Roku, and home sellers were getting multiple offers within a week of listing their homes. Netflix stock was $500 per share and Roku was $400. Now Netflix is $236 and Roku is down to $65.
Home sellers today are listing their homes for sale and it seems the buyers are all on vacation. Airlines haven’t been able to keep up with the pent-up demand, and hotels and restaurants are returning to profitability.
Mortgage and real estate companies around the country are not calling this a buyer’s market, but it sure feels like one to me. Smart top-producing real estate agents and their sellers are offering incentives to buyers like credits for closing costs and now, unlike last summer, sellers will accept an offer contingent on the sale of the buyer’s departing residence, which is great for move-up buyers who need to sell their old house to afford the new one.
Realtors on social media are calling price reductions, price improvements, which is smart. This market should make it easier for people who want to move up from their starter home to their forever home.
Keep in mind, if a person sells in this market and simultaneously buys in this market, at the end of the day it’s a wash. The only difference might be the interest rate on the mortgage versus the rate they obtained in 2020 and 2021 when rates fell below 3%.
This is a legitimate reason for staying put if the buyer’s future income is not going up. However, if the household income is expected to be much higher in the next five to 10 years, it is usually a good idea to buy a home in a buyer’s market.
Over the past couple of weeks, a few listing agents have told me some sellers are frustrated and considering taking their homes off the market and selling later when the market gets hot again. The problem with this strategy is that they will be moving up to their dream home or down to their retirement home in a sellers’ market.
Mortgage rates are a full 1% lower today than 45 days ago. It’s time to buy. We should expect mortgage lenders, builders and real estate firms to downplay the recession and this “buyer’s market” by calling it a “balanced market” because we all want business but, in this case, we are being honest.
The experts all know home prices cannot go up 15% every year and may be flat for a year or two, but they all know there is a housing shortage in America and almost all homeowners today are financially healthy because nobody has been able to get a liar loan in 15 years.
The real punch line for first-time homebuyers is rental inflation for single-family homes, which is up 14% year-to-date while home prices have been flat. Renting is no fun.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.