Friday, April 28, 2023

The weather is nice, are more listings on the way?

This spring took a fair while to develop locally as winter like weather persisted well into April. But now it is sunny and warm and with that turn of season often comes a bunch of fresh new listings. We could use a hit to inventory to help buyers out who still face multiple offers on homes in and around the local median price. That is running just under $500,000 right now. 

Buyers are facing pretty typical interest rates when compared to the 50 year average. That long run of years and years at below average rates has no doubt spoiled things a bit now that we have settled into a more "normal" mortgage market. 

Buyers can also take advantage of some new mortgage products aimed at helping first time buyers get into the market with low to zero downpayment and sometimes a little government assistance. These programs can really help buyers get an opportunity in this still tight market.

Despite losing a huge portion of eligible buyers the stingy inventory has kept things favoring sellers a bit. A rush of new spring listings will likely level the field offer buyers some negotiating room. Buyers haven't had that in quite a while.

Be sure to contact me if you are interested in these new programs.

Friday, April 14, 2023

Spring Outlook

Spring is here, at least by the calendar if perhaps not by the weather. Traditionally there is an uptick in new listings this time of year. The local MLS showed just that last month. The real question is whether an uptick in buyers will follow. That is also a typical scenario. But we just came out of a long red-hot period in real estate that was driven by artificially low interest rates. These crazy low rates made it possible for lower income people to buy a house. Many of them jumped at the opportunity. 

It also made it downright easy for people who purchased starter homes a few years earlier to sell and move up to a larger home, sometimes without having a higher mortgage payment. Bigger house lower payment? Where do I sign? 

As rates began to creep up two things happened and it is a good thing that they both happened. The higher rates eliminated a number of buyers at the lower end of the income spectrum. Where they qualified to buy at 3% they no longer qualified at 6%. This took buyers out of the marketplace, which normally would lead to flat or declining prices. There was however, an additional effect of stifling the move up market. People are sitting on huge equity reserves but they are reluctant to give up the sub 3% loans they have. So as the buyers dried up the inventory also flattened out and that was a bit of a stalemate. 

The worst thing that could happen now is a massive rush of new inventory. People feel like there is a lot of buyers because there is so few homes in inventory, in reality there are very few buyers right now, it just so happens there is even less inventory. I would compare the market in 2018 to today as follows. In 2018 there was 10,000 buyers vying for 1,000 houses. Today there is 1,000 buyers vying for 100 houses. From the buyers perspective it feels the same, but for the market at large there are very few homes actually being sold. 

Hopefully we will see a slight uptick in inventory to ease the pressure off buyers, but not too much so as to cause a drop in prices. Only time will tell but this extra cool spring is not helping to get sellers off the fence. Usually it is the warm spring days that get the market awake and eager. We haven't had any warm spring days yet. Stay tuned.