With apologies to Charles Dickens, the housing market has become a tale of two sectors.
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The existing home market has been stymied -- largely by mortgage rates that have climbed into the 8% range, but also by a rock-bottom lack of inventory.
The low interest rates people took advantage of during the pandemic have become a “disincentive” for those who would otherwise sell now, said Ali Wolf, chief economist at Zonda, an advisory firm. “They’re not eager to sell.”
At the same time, the new home market is thriving, mostly because builders can satisfy demand, even at higher loan costs. According to Wolf, whose firm specializes in new construction, builders are gobbling up a third of all sales. That’s double their traditional share of 10% to 15%.
“People are still out there shopping the market,” Wolf said during a recent webinar, “and builders are finding a way to satisfy them.”
While some builders are seeing a slowdown, most report their sales are still on track, she said. The majority of builders are not worried because they believe any falloff is seasonal.
While some builders have raised their prices -- some, just because they can; others, to slow things down a bit so their construction crews can keep pace -- most are instead offering some kind of sales incentive. The most popular incentive? A mortgage rate buydown. More than two-thirds of the builders queried by Zonda offer to buy down their buyer’s rate, either for the short term (one to three years) or permanently.
With many owners choosing to stay put rather than give up their relatively low-cost financing, first-time buyers are driving the market. According to Zillow, rookies account for half of all sales. That’s up from 45% last year and 37% in 2021.
A greater share of unencumbered first-timers is “filling the gap” left by the absence of repeat buyers, said Zillow Senior Population Scientist Manny Garcia. And they’re competing against one another for the relatively few properties on the market. That, he said, is what’s keeping upward pressure on prices, at least in the more affordable “starter home” category.
If your house is on the market, expect a serious dip in traffic this weekend. According to ShowingTime, the most significant nosedive in showings comes at Thanksgiving.
Showings, a proxy for buyer interest, generally increase during the first 16 weeks of each year and then gradually slow until December, the company reports. But they take serious dips at every holiday, with Turkey Day bringing the biggest hit.
Showings tend to peak in late June or early July, with sales peaking about two to four weeks later. Closings peak about four to six weeks after that. So don’t place too much credibility in reports that use closings as the basis for determining the best time to sell your house. If you do, you could be too late to hit a housing’s hot spot.
“It is not rocket science to recognize that closings peak about two months after the peak in buyer interest,” says Virginia agent David Rathgeber of Your Friend in Real Estate.
“A focus on real estate closings has resulted in many believing they should put their home on the market when the kids are out of school, which is three or four months too late. If you are selling a home, obviously it should be on the market a month or so before the peak in buyer interest.”
If your builder claims to be constructing energy-efficient houses, chances are good they're receiving a tax credit from Uncle Sam. So why not ask to share in the government’s largesse? Builders are offering all kinds of incentives these days, so they might be willing to pass along some, if not all, of their savings.
Houses that qualify (including manufactured homes and multifamily units) are eligible for tax credits from $500 to $5,000, with the actual amount depending on the property’s energy efficiency and the date it sold. The credits are available through 2032.
As my grandma used to say: It may not help to ask, but it won’t hurt.
Here's a novel way to tell the world you've lowered your home's asking price. Instead of a "price drop" or "price cut," call it a "price improvement."
That's what Maryland agent Hill Slowinski does -- and it seems to work. "It's a way to turn a negative into a positive," he told me. "We are 'improving' the price to make it available to a wider share of the market."
A Cincinnati woman is facing federal charges after allegedly making false claims that her landlord evicted her because of her race.
Prosecutors said she faked text messages and voicemails from her landlord to support her claim. “I told you I want you gone,” one falsified text said. “I will not rent (to) African Americans again.”
Government investigators conducted a forensic analysis of her phone and found that the messages were sent from text-faking websites. Voicemails were likewise found to have been fabricated.
The woman faces several charges, including making a false statement to federal officers.