It’s a Tough Market for Buyers – Many Don’t Care

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woman showing buyers a house

MAY 12, 2023

By Kerry Smith

Survey: Most would-be buyers (55%) know it’s a really tough market right now, but a majority (54%) still plan to maintain current goals or speed up the buying process.

CHARLOTTE, N.C. – Many hopeful homebuyers – especially those in their 40s and younger – are forging ahead with plans to buy homes despite believing the market favors sellers, according to Bank of America’s 2023 Homebuyer Insights Report.

More than half of prospective homebuyers surveyed (55%) believe the market is more competitive than last year – but just as many (54%) plan to either speed up their home purchases or buy when they originally planned.

The percentage is even greater for younger generations: 62% of Gen Z and 55% of millennials.

However, not all want-to-be buyers plan to stay in the market, at least not now. Two in five (39%) believe it’s a seller’s market, while 18% say it’s a buyer’s market and 31% say it’s neither.

Current challenges cited by buyers

  • High prices and interest rates (51%)
  • A lack of cash reserves for down payments (37%)
  • A low credit score (37%)

Still, nearly 40% of those prospective homebuyers said they feel more confident in their ability to buy a home today versus last year, compared to 26% who are less confident and 28% who feel about the same.

“The market is less frenzied as rates have moderated, and that may be impacting perception,” says Matt Vernon, head of retail lending at Bank of America. “And low inventory is still creating a highly competitive environment. Homebuyers are doing the right thing by taking time to understand the market, weigh their priorities and determine what fits into their budgets.”

The motivation for many buyers? Financial security. Homeownership has historically helped families build long term-wealth.

A majority (56%) of Gen Z and the same percentage of millennial homebuyers plan to purchase in the next two years – nearly on par with Gen X (58%).

Nearly half (47%) of all prospective buyers say they’d buy a home in the current housing market because they’re tired of renting and of rent increases; 28% want to start building equity.

Inactive homebuyers still curious

Even hopeful buyers waiting for the housing market to cool are forging ahead in their own way, according to the study: More than two-thirds (67%) still actively look at homes for sale, either scrolling through a real estate app (52%) and/or visiting open houses (31%).

Those scanning for homes find it to be an enjoyable pastime (41%), a way to dream about their future home (37%) and a window into how others have decorated their spaces (32%).

Beyond simply looking for inspiration, two-thirds (65%) of those who scroll through listings are interested in what their current budget would get them if they were to buy today.

© 2023 Florida Realtors®

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APRIL 7, 2023

Why Does It Still Feel Like a Seller’s Market?

By Kerry Smith

RE usually sees cycles between buyer’s and seller’s markets, but this time it’s a bit different. Supply vs. demand hasn’t changed because both sides pulled back.

SEATTLE – New listings fell 21.8% year-to-year during the four weeks ending April 2, one of the biggest drops since the start of the pandemic, according to a Redfin study.

An increasing number of homeowners don’t want to move because they still have generational-low mortgage rates secured only a few years ago. While rates have fallen for four weeks in a row, according to this week’s report, they’re still about twice as high as they were before 2021.

As a result, buyers unafraid of current mortgage rates quickly scoop up new listings. Of homes going under contract, nearly half are doing so within two weeks; at the beginning of 2023, it was about 25%.

“Elevated mortgage rates are perhaps an even bigger deterrent for would-be sellers than for would-be buyers,” says Redfin Deputy Chief Economist Taylor Marr. “Giving up a 3% mortgage rate for one in the 6% range is a tough pill to swallow. Today’s serious homebuyers have grown accustomed to the idea of a 5% or 6% rate and have adjusted their budgets accordingly.”

“Shiny new listings are getting multiple offers and selling fast. The caveat is that they have to be priced correctly from the beginning,” says Denver Redfin agent Stephanie Collins. “One of my buyers recently made an offer on a move-in ready home in a popular area. The home was priced right in line with the market at $520,000; it received eight offers and went for $560,000 to a competing buyer.”

Florida ranks near top for rising home prices

In cities where buyer demand outpaces seller supply, home prices continue to go up – and Florida is home to three of the top five U.S. cities for price increases.

While Milwaukee led the nation for price increases (up 11.4% year-to-year), Fort Lauderdale came in second (up 8.9%), followed by West Palm Beach (up 8.2%), Miami (up 7.9%) and Columbus, Ohio (up 6.3%).

On the flipside, the top five price declines in the U.S. were largely on the West Coast: Home prices dropped in 28 of the U.S.’s 50 most populous metros, with the biggest drop in Austin, Texas (down 14.7% year-to-year), Sacramento (down 11.7%), Oakland, California (down 10.4%), San Jose (down 10.2%) and Seattle (down 9.6%).

© 2023 Florida Realtors®

Existing-Home Sales Surged 14.5% in February, Ending 12-Month Streak of Declines

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Largest monthly percentage increase since July 2020

March 21, 2023 Media Contact:  Troy Green 202-383-1042
Read full NAR article

Key Highlights

  • Existing-home sales jumped 14.5% in February to a seasonally adjusted annual rate of 4.58 million, snapping a 12-month slide and representing the largest monthly percentage increase since July 2020 (+22.4%). Compared to one year ago, however, sales retreated 22.6%.
  • The median existing-home sales price decreased 0.2% from the previous year to $363,000.
  • The inventory of unsold existing homes was unchanged from the prior month at 980,000 at the end of February, or the equivalent of 2.6 months’ supply at the current monthly sales pace.

WASHINGTON (March 21, 2023) – Existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020, according to the National Association of REALTORS®. Month-over-month sales rose in all four major U.S. regions. All regions posted year-over-year declines.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – vaulted 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February. Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).

“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said NAR Chief Economist Lawrence Yun. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”

Total housing inventory2 registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.

“Inventory levels are still at historic lows,” Yun added. “Consequently, multiple offers are returning on a good number of properties.”

The median existing-home price3 for all housing types in February was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West. This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.

Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022. Fifty-seven percent of homes sold in February were on the market for less than a month.

First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 20224 – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.

All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.

Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in February, up from 16% in January but down from 19% in February 2022.

Distressed sales5 – foreclosures and short sales – represented 2% of sales in February, nearly identical to last month and one year ago.

According to Freddie Mac, the 30-year fixed-rate mortgage(link is external) averaged 6.60% as of March 16. That’s down from 6.73% from the previous week but up from 4.16% one year ago.

Read full NAR article

Week of March 10th Weekly Real Estate Update

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Key Findings:

  • The median listing price grew by 6.3% over last year. Growth in the typical asking price of for-sale homes moved lower after a slight uptick last week’s pace, once again hitting a new low since June 2020, when the housing market was beginning to bounce back from the initial pandemic shock. While the housing market had shown some signs of stabilizing, a renewed climb in mortgage rates could undermine the recovery. With the Fed signaling that higher rates for longer may be necessary to tame inflation, all eyes are focused on their March statement and clues on how their view of the future has evolved. 
  • New listings–a measure of sellers putting homes up for sale–were again down, this week by 26% from one year ago. For 35 weeks now, fewer homeowners put their homes on the market for sale than at this time one year ago. Until this week, the gap was slightly smaller than we saw in the last quarter of 2022. In February, attitudes toward housing worsened among both potential buyers and potential sellers as mortgage rates began to climb again and respondents reported lower job security. These attitudes could mean ongoing weakness in the number of homeowners deciding to sell. 
  • Active inventory growth continued to climb with for-sale homes up 61% above one year ago. Inventories of for-sale homes rose again, but the gain was the lowest we’ve seen since December. With new listings lagging behind year-ago pace, the growing number of homes for sale reflects longer time on market rather than an influx of sellers. It’s also important to remember that this year over year comparison is relative to early 2022, when active listings were at or near long-term lows. Even after these huge year over year gains, February data show that nationwide there are only just more than half as many homes for sale as were available pre-pandemic (-47%). 
  • Homes spent 18 extra days on the market compared to this time last year. For 31 weeks, homes on the market have been for-sale longer than was typical one year ago. After rising steadily from summer 2022, the gap surged early in 2023, surpassing the 3 week mark in mid-February. This week, however, marks the third week that the gap has shrunk even as new listings remain scarce, suggesting that buyers are active in the market, even if they are not as numerous as this time last year. Our February Housing Trends Report helps put these changes into context. Even though the median home listing was on the market for 67 days, 23 days longer than this time last year, this still trailed the pre-pandemic average for February by a nearly equal amount (20 days). In other words, using time on market as a guide, today’s housing market is halfway between its most frenetic period one year ago and what was typical before the pandemic-era frenzy. This means that the market has room to adjust in either direction, and mortgage rates will likely play a strong role in determining whether the market slows further or picks up speed.
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3 wooden homes, a pile of money and an FHA loan sign

Andrii Yalanskyi, Getty Images

DECEMBER 2, 2022

FHA Announces 2023 Loan Floors and Ceilings

By Kerry Smith

Loans for single units range from $472,030, the floor, to $1,089,300, the ceiling. For four units, it’s $907,000 to over $2M – and in some non-Fla. areas, over $3M.

WASHINGTON – The Federal Housing Administration (FHA) announced new loan limits for calendar year 2023 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs.

For most of the country, loan limits will increase next year due to house price appreciation during the first half of 2022, which is factored into calculations FHA uses to determine the limits each year. The yearly increase calculations for FHA loans and those backed by Fannie Mae and Freddie Mac are written into law.

“The loan limits announced today reflect steep increases in home prices throughout much of the country and will ensure continued access to FHA-insured mortgage financing despite those increases,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon.

Forward mortgage loan limits

Range of prices for 2023 FHA loans based on location and number of units

Mortgage limits for the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands are adjusted by FHA to account for higher costs of construction.

In 2023 the maximum loan limits for FHA forward mortgages will rise in 3,222 counties. In 12 counties, FHA’s loan limits will remain unchanged. By statute, the median home price for a Metropolitan Statistical Area (MSA) is based on the county within the MSA that has the highest median price.

HECM loan limits

The HECM maximum claim amount will increase from $970,800 this year to $1,089,300 for FHA case numbers assigned on or after Jan. 1, 2023. This maximum claim amount is applicable to all areas, including the special exception areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

To find a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit FHA’s Loan Limits Page.

© 2022 Florida Realtors®

NAR: 3Q Home Prices Up in 98% of Metros

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By Kerry Smith -NOVEMBER 11, 2022

Home prices rose 8.6% in 3Q, with 46% of metros seeing double-digit price growth – a drop from 80% in 2Q. Of the top 10 high-price-increase metros, 7 are in Fla.

WASHINGTON – An overwhelming majority of metro markets saw home price gains in the third quarter of 2022, according to the National Association of Realtors® (NAR). That increase was in spite of rising mortgage rates that approached 7% and declining sales.

Of the 185 metros NAR tracks, 46% had double-digit price increases, though that’s down from 80% in the second quarter.

The national median single-family existing-home price climbed 8.6% year-to-year to $398,500. While still a notable price increase, it’s down from the 14.2% recorded in the previous quarter.

“Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising,” says NAR Chief Economist Lawrence Yun. “The median income needed to buy a typical home has risen to $88,300 – that’s almost $40,000 more than it was prior to the start of the pandemic back in 2019.”

Among the major U.S. regions, the South registered the largest share of single-family existing-home sales (44%) and the greatest year-over-year price appreciation (11.9%) in the third quarter. Prices were up 8.2% in the Northeast, 7.4% in the West, and 6.6% in the Midwest.

Fla. has 7 of top 10 metros for price growth

  1. North Port-Sarasota-Bradenton – 23.8%
  2. Lakeland-Winter Haven – 21.2%
  3. Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. – 21.1%
  4. Panama City – 20.5%
  5. Deltona-Daytona Beach-Ormond Beach – 19.6%
  6. Port St. Lucie – 19.4%
  7. Greenville-Anderson-Mauldin, S.C. – 18.9%
  8. Kingsport-Bristol-Bristol, Tenn.-Va. – 18.8%
  9. Tampa-St. Petersburg-Clearwater – 18.8%
  10. Ocala (18.8%

10 most expensive markets in the U.S.

  1. San Jose-Sunnyvale-Santa Clara, Calif. – $1,688,000; 2.3%
  2. San Francisco-Oakland-Hayward, Calif. – $1,300,000; -3.7%
  3. Anaheim-Santa Ana-Irvine, Calif. – $1,200,000; 9.1%
  4. Urban Honolulu, Hawaii – $1,127,400; 7.6%
  5. San Diego-Carlsbad, Calif. – $900,000; 5.9%
  6. Los Angeles-Long Beach-Glendale, Calif. – $893,200; 3.8%
  7. Boulder, Colo. – $826,900; 7.5%
  8. Naples-Immokalee-Marco Island – $746,600; 16.7%
  9. Seattle-Tacoma-Bellevue, Wash. – $741,300; 4.6%
  10. Boston-Cambridge-Newton, Mass.-N.H. – $698,900; 6.2%

“The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building,” Yun says. “The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise.”

Higher cost for monthly payments

In the third quarter of 2022, stubbornly high home prices and increasing mortgage rates reduced housing affordability. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840. That’s a marginal increase from the second quarter ($1,837) but a significant year-to-year jump of $614 – or 50%.

Families typically spent 25% of their income on mortgage payments, down from 25.3% in the prior quarter, but up from 17.2% one year ago.

“A return to a normal spread between the government borrowing rate and the home purchase borrowing rate will bring the 30-year mortgage rates down to around 6%,” Yun says. “The usual spread between the 10-year Treasury yield and the 30-year mortgage rate is between 150 to 200 basis points, rather than the current spread of 300 basis points.”

First-time buyer challenges

First-time buyers looking to purchase a typical home during the third quarter of 2022 continued to feel the impact of housing’s growing unaffordability. For a typical starter home valued at $338,700 with a 10% down payment loan, the monthly mortgage payment rose to $1,808 – nearly identical to the previous quarter ($1,807) but an increase of almost $600 (49%), from one year ago ($1,210).

First-time buyers typically spent 37.8% of their family income on mortgage payments, up from 36.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.

A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 59 markets, up from 53 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 17 markets, down from 23 in the previous quarter.

© 2022 Florida Realtors®

Real Estates Current Market Silver Lining

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For those looking for the good news about today’s real estate market. A bit of a deep dive, about 60 minutes worth but excellently delivered. Three main facts tell us it’s not all doom and gloom. Combine them with the time of year and the general fear that has most buyers/sellers on the sidelines, spells opportunity. (40:00). We can help should you decide to take advantage of today’s market.

  • Historical trends, what happens after quantitative tightening (12:00)
  • Demographics, there’s a lot of millennials (24:50)
  • Inventory levels, yes they are still historically low (22:00)

Weekly Market Report: Week Ending Oct. 16

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Access this weekly report for real-time data on residential market activity across the Bright MLS footprint.
October 17,  2022 Lisa Sturtevant, PhD

Here are the highlights for the week ending October 16, 2022:

  • Inventory continues to increase throughout the Bright footprint. The average number of active listings during the week ending October 16 was up 17.5% compared to the same week a year ago. Active listings edged up 0.9% compared to last week, which is the second weekly increase in a row. Despite these increases, overall supply across the region remains very low.
  • Market activity is still below 2019 levels as buyers and sellers continue to remain on the sidelines. On the buyer side, both closed sales and new purchase contracts were down significantly compared to last year at this time and were even lower than before the pandemic. Closed sales this week were about 14% lower than the same week during 2019, while the number of new purchase contracts tracked 22% lower than during the same week in 2019.
  • There was a slight uptick in both new purchase activity and new listings compared to a week ago. Typically, both the number of new purchase contracts and new listings decline during the second week of October. This year, however, there were slight increases, with new purchase contracts 2.1% higher than a week ago and new listings up 3.0% week-to-week. These weekly increases could indicate some buyers and sellers are starting to act in anticipation of higher mortgage rates later this fall.
  • Homes are still selling relatively quickly. The median days on market was 15 during the week ending October 16, which is up four days compared to last year and is one day longer than a week ago. The median days on market is still much lower than 2019, when homes typically took 25 days to sell.
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Calendar with bill due dates circled, including on that says pay rent

OCTOBER 6, 2022

Fannie Mae Joins Freddie, FHA to Use Rent Payments

By Talis Shelbourne

A majority of mortgage providers will now allow renters with thin credit scores to include on-time rent payments in the data a lender uses when considering approvals.

WASHINGTON – Fannie Mae launched its Multifamily Positive Rent Payment Reporting pilot program last week, offering a national lifeline to aspiring homeowners with no established credit history.

The program is expected to have a significant impact on cities with high renter populations and on groups that often have difficulty establishing credit.

Fannie Mae, officially the Federal National Mortgage Association, was created by Congress during the Great Depression. The public-private “government-supported enterprise” purchases mortgages from financial institutions.

Fannie Mae had already updated its computer-automated system last year to include bank records showing consistent rent payments by individuals. The system, called the Desktop Underwriter, is used by lenders to evaluate the creditworthiness of mortgage applicants.

The change meant individuals could collect documentation of their rent payments made via check, electronically through a rental management’s payment portal and through other electronic methods connected to a bank and provide those to a mortgage lender as evidence of a good rental history. Freddie Mac and FHA loans previously announced rent-payment considerations.

This latest rent reporting program allows the renters of multifamily properties to report their rent payment history. As an incentive, Fannie Mae will cover the first year of costs associated with reporting that data.

According to Fannie Mae, if a renter misses a payment, they are automatically unenrolled so it does not damage their credit score; landlords, however, are allowed to report missed rent payments to credit agencies on their own, which would negatively impact credit history.

Credit is an essential part of the home buying process, and experts advise prospective homeowners achieve a credit score of at least 620 to get the best rates for a mortgage.

The lender ultimately decides to approve the loan. In some cases, Fannie Mae will purchase a loan to “guarantee” it, which means it is responsible for the debt if the borrower defaults.

© 2022 Journal Media Group.

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Scott Bradley Brixen – ListReports Blog

Real Estate News

Interest rates for the average 30-yr, fixed-rate mortgage according to Freddie Mac’s PMMS hit:

4% in March 😟
5% in April 😰
6% in early-September 😨
7% (well, almost) in late-September 😱

The slowdown continues, but we have yet to see the impact of the most recent (massive) jump in mortgage rates on homebuyer demand.

August existing home sales dropped for the 7th straight month. Price growth decelerated further to “just” 8% YoY. [Source: Realtor.com]

Meanwhile, pending sales for August dropped 2% MoM and 24% YoY. The NAR now forecasts existing home sales to fall 15% YoY in 2022, with new home sales down 21% YoY. [Source: NAR]

Case-Shiller Index

Home price growth slowed to 15.8% YoY in July, from 18.1% YoY in June. That may not seem like much, but it’s the biggest 1-month drop in the index’s history.

Case-Shiller is the gold standard for home price appreciation because it tracks the sales prices of very similar homes across 20 big cities. It’s an ‘apples to apples’ comparison. But that accuracy comes at a cost…the data is 2 months old by the time we get it.

Mortgage Market

An extremely volatile week for the bond market (after the Fed raised rates 75bps) saw 30-year, fixed-rate mortgages briefly exceed 7% [with no points], before dropping back to around 6.75%. [Source: Mortgage News Daily]

Freddie Mac’s closely watched PMMS survey saw the interest rate on the average 30-year, fixed-rate mortgage climb to 6.7%. Keep in mind that this figure includes an average 0.9 points purchased. Without those points, the rate would have been at/ahead of 7%.

Still a Seller’s Market

Demand is falling and inventory has risen, but in most markets, well-priced homes are still selling very, very quickly.

In fact, the average Days on Market for sold properties has only edged up from 14 (in June & July) to 16 in August. In 2011 that figure was 96! Looked at another way, 81% of homes sold in August had been on the market less than a month.

That said, the average number of offers received for each property sold has plunged from a frenzied 5.5 in April 2022 to 2.5 in August. That’s actually getting pretty close to “normal” pre-pandemic levels of competition.

National Housing Stats

They Said It

“Success demands singleness of purpose. You need to be doing fewer things for more effect instead of doing more things with side effects. It is those who concentrate on one thing at a time who advance in this world.” — Gary Keller, The One Thing

“Our house is clean enough to be healthy and dirty enough to be happy” — Robyn Griggs Lawrence

Inspiration

The average duration of homeownership in the US is around 12 years. So if someone in your sphere of influence (SOI) bought a home in the last few years, there’s no reason to actively stay in touch with them, right? Wrong. Take the inverse of 12 (that’s 1/12) and you get 8.3%.

This means that, mathematically, 8% of your SOI is going to move in the next year…for reasons that you (and often they) couldn’t have predicted. Hockey legend Wayne Gretzky said “you miss 100% of the shots you don’t take.” In real estate, you probably lose 80–90% of the past clients that you don’t stay in contact with.