Feeling the slowdown? As mortgage rates soar, fewer people are buying homes and fewer people have budgets to update their roofs. Here’s what you need to know based on expert opinions in a full-page article “It’s Worse Than You Imagined” from last Sunday’s New York Times Business Section P. 8:
- LOW MORTGAGE RATES ARE OVER: In January 2021 rates sank to a record low of 2.65% for the 30-year according to Freddie Mac. The rate now is 6.95% a slight dip from over 7%.
- CHANGE IN COSTS IN PRACTICAL TERMS: Between soaring prices and rising rates, the typical buyers last month paid 77% more on their loan, per month, than they would have in October last year according to Realtor.com. With a national median asking price of $425K and a 10% down payment, that works out to an additional $1,117/month.
- IT’S A STARE DOWN: Sales are stalling as both buyers and sellers are waiting for the other side to budge.
- HOMES FOR SALE INVENTORY IS RISING: Not everywhere yet, but in some go-go markets. Take Phoenix Metro: Active listings are up 167% over last year. Raleigh 166%, Nashville 125%, Austin 124%. Detroit 19%
- CUTS IN ASKING PRICES ARE COMING AS HIGH AS 30%: This is in high-appreciation areas like the Mountain West and the South. This is because existing home prices soared 45% from Dec 2019 to June 2022…the biggest jump ever recorded.
- INVENTORY IS STILL LIMITED: Adding to the glut is the fact that many homeowners choose to keep their 3.5% mortgage rather than flip and pay more in interest on the new home.
- NEXT 6-12 MONTH PREDICTION: “Another year or two” before mortgage rates begin to fall— National Assn of Realtors. “5.4% by the end of next year”–Mortgage Banker Assn.
- SELLERS MUST WORK HARDER: Gone are the $100,000 offers over the asking price. Now sellers are being asked for concessions.
Zeroing in on the needs of your customers has always been key. Now recognizing where they are with their home, their mortgage, their options and their constraints are all very important.
Onward and upward!