Justin Moore, 50, and his wife have been dreaming of buying a home in Florida for many years. However, the real estate market was quickly moving against them as mortgage rates skyrocketed over 7%, and home prices were stubbornly high.
Sellers Open to Negotiations
After 11 consecutive months of existing home sales declining, sellers are more open to negotiating on price. Additionally, 30-year mortgage rates are nearly a full percentage point off their peaks, with further declines forecast. This is motivating buyers like Moore, who is tired of renting and “living in somebody else’s house.”
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Buyer’s Market
According to Redfin, thirteen percent more buyers are ready to begin the process of purchasing a home compared to the trough in November, and some 28% more have applied for a mortgage since then. Real estate agent Alexandra Shupe, from Brevard County, Florida, also notes that the market has shifted from sellers controlling everything to now being more of a neutral, and even almost a buyer’s market.
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Mortgage Interest Surges
Mortgage broker Jennifer Beeston of Guaranteed Rate was stunned by the interest she is seeing from potential homebuyers as a result, she said. “We were not expecting it. Usually, January is the month you take naps,” she said in a video posted to her YouTube channel last week. “This year it is gangbusters. People are ready to buy a house.”
Economic Extremes
For the past few years, the housing market has been a portrait of economic extremes. A year-and-a-half of frenzied demand pushed prices up north of 50% in some cities. Then, as the Federal Reserve stepped up efforts to quell inflation, long-term mortgage rates hit their highest point in more than two decades, triggering a quick and dramatic market slowdown.
Now, as inflation and mortgage rates begin to ease, and some housing markets have cooled, buyers are in a better mood and have an upper hand on sellers suffering the chill of the last year. The average 30-year mortgage rate was 6.13% in the past week, according to Freddie Mac.
Advice for Buyers
Those looking for a new home are in a good place to cash in on the perks of a buyer’s market right now, Shupe said. In negotiating deals for buyers, she said she’s asking sellers to pay fees that result in lower mortgage rates for the buyer. She encourages buyers to make offers “significantly under” the asking price and request other concessions.
Conclusion
One sticking point for buyers is that sellers have stepped back. Redfin data shows the number of sellers jumping into the market is up 10% since November, but new home listings are still down because sellers are waiting for the market to turn back in their favor. However, to Shupe, it means the market is just not at the extremes that bookended the past year, it’s “more of a normal market, sort of that we were in pre-2020,” she said.
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