Housing market is cooling down as consumers grow tired higher mortgage rates. In December, the number of newly listed homes for sale fell about 37% from a year ago, according to Redfin data.
What are real estate professionals seeing on the ground?
Yahoo Finance Live’s Seana Smith recently sat down with Kathy Casey, a Coldwell Banker real estate broker in Denver, Indianapolis-based Dan O’Brien, a broker at Trueblood Real Estate, and Sir Ashley Harrison, real estate agent at the Harrison Group with Fathom Realty in Charlotte, North Carolina (video above).
Bottom line: consumer demand has dropped markedly.
“We are seeing more inventory, but [fewer] new listings, and buyer demand has fallen. And we’re getting more offers from sellers, but prices are still very stable,” Casey said.
O’Brien added: “So things are going to last a little bit longer in the market. The day on the market is up. But the average selling price is still up 9% or more year over year. But buyer demand has certainly slowed with rising interest rates.”
The trio also recorded an increasing percentage of buyer concessions — nearly 42% of home sellers offered such offers in the last three months of 2022, according to Redfin. Such concessions include lower closing costs, repair money, and increased buy-down rates equal to mortgage rates. For example, increase the “2-1 buy-down” rate, an arrangement that allows homebuyers to pay a lower interest rate for the first two years of their mortgage.
“That’s what really helps buyers … get the homes they want, because affordability is key in Colorado,” Casey said. “Just to give you some perspective, our house prices have doubled in the last 10 years. And so wages can’t keep up with that. So anything to help a buyer get into a home is what sellers are doing right now.”
O’Brien said the same thing is happening in Indianapolis. “People are getting more creative with mortgage lending,” O’Brien said. “Different banks are offering different types of mortgage products to help reduce that rising mortgage rate.”
Time to buy?
Despite weaker demand, North Carolina remains one of the most popular markets. (Zillow recently ranked Charlotte as number one hottest housing market.) Harrison says now might be the time to buy. “If you have been on the sidelines and have not been able to accept your offer for the past two years, now is the time for a change. Although interest rates are a bit higher, you don’t have to compete with that many people.”
All three experts ultimately predict that mortgage rates will fall by year-end along with an increase in buyer activity. Mortgage rate currently stands at 6.33% for a typical 30-year loan, according to the Freddie Mac Major Mortgage Market Survey. That’s compared to 3.45% during the same time last year.
“So if you’re looking to buy, don’t wait because you want to get out of there before the rest of the market comes back,” Casey said.
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
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