Last Updated on June 6, 2024
It’s moving season! As buyers and sellers flock to the market, here’s what you can expect in the busy spring and summer selling season:
Inventory
Good news here—Inventory is growing. There are more listings on the market today than there were in the last 12 months. However, this still doesn’t come close to solving the inventory challenge we’ve been having for quite some time.
Home prices
Despite the fact that listings are up and that the buyer pool is reduced, compared to this time last year, there is not nearly enough movement to change the inventory issue. As a result, home prices continue to appreciate.
Just to give you an idea of what we’re seeing nationally, 29% of homes are selling over asking and the average amount of offers each home received was 3.1, so despite fewer buyers in the market, homes are still receiving multiple offers and closing for over asking price.
Interestingly enough, we’re seeing as much as 30% of first-time home buyers receive a gift letter to help them purchase their home, which is a 50% increase over historic averages.
Interest rates
Interest rates will generally move with the government’s reported inflation results. That means we’ll be following the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) indices to get a sense of the future direction. Both of those results will be heavily influenced by the reports on wage growth and current unemployment.
At this time, the inflation numbers have been mixed, which has resulted in a stable interest rate market, but one that is higher than many economists predicted at the start of the year.
The common forecast is that inflation will continue to remain flat to slightly down, resulting in mortgage rates staying roughly where they are today with an improved chance to go down towards the end of the year. Overall, look for interest rates to range from 6.75% to 7.5% for the next few months, with 6.5% being more likely by year-end.
Advice for Buyers
Be ready to buy when you find the home for you. Beyond knowing what you can afford or what you can qualify for, it’s a good idea to have your financing locked down so that when you go to make an offer, it’s as strong as a cash offer. The idea here is to take the financing uncertainty out of the negotiation!
While it’s true that there is less competition today than there has been in the past 12-18 months, that doesn’t mean you can move slowly, as we’re still seeing multiple offers.
Historically, first-time home buyers will get a gift letter 20% of the time. That has now increased to 30%, which is a 50% increase over historic averages. There are also down payment assistance programs that help bridge a savings gap for certain buyers. Your Howard Hanna Loan Officer can walk you through those options.
Can first-time home buyers avoid PMI?
Howard Hanna Mortgage has a no private mortgage insurance option for people who put 15% down and also serves this group of buyers with FHA, VA, and USDA loans that have varying insurance costs depending on the buyer’s situation. However, buyers have benefited from the very low default rates over the last several years, as it has driven the cost of mortgage insurance down, so the average buyer benefits even when they choose a mortgage insurance option.
Advice for Sellers
Even though there are less buyers in the marketplace than this time last year, homes that are priced well and in good condition are still going for over-asking and receiving multiple offers. Therefore, it’s important to price your home correctly from the onset.
Rather than pricing your home what you think it’s worth, allow the market to drive the sale price for maximum exposure.
If you are planning on buying another home and want to have clarity and certainty around your new financial obligations, visiting with your Loan Officer while you are selling your home is ideal. He or she can help you determine the best strategy to provide the payment, cash flow, and debt management plan to suit your needs.
Bottom line:
Despite inventory and interest rate challenges, it’s still a great time to buy. It’s important to note that investing in real estate remains the primary method for maintaining and building generational wealth.
–Gary Scott
President
Allen Tate Company
