On today’s Real Estate Coaching and Training podcast (and Youtube) Tim and Julie Harris will give you the facts about the housing market that the media doesn’t seem to want you to know. The facts point to a continued strong housing market for at least the rest of 2022 with increasing opportunity to help others and make money.
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1 – Home prices are still increasing month over month, even with the rise in interest rates and slower showing activity. According to CoreLogic, nationally, prices are up 20.6% through April 2022. This matters because it keeps serious sellers interested in cashing out, and gives them more money to put towards down payments, rate buydowns, etc. It’s also important because it helps continue equity growth which prevents distressed sales.
Tampa increased 34.8%
Phoenix increased 32.4%
Miami increased 32.0%
Even the smallest gaining markets were up an average of 12.5% (Minneapolis, Washington, and Chicago).
According to Lawrence Yun, economist for NAR, by the end of 2022, these increases may slow to 5% growth.
It’s also interesting to note that over the past 30 years of tracking home price inflation, the average rate is 3.7%. That takes into account the Great Recession as well as the temporary slowdown in the early days of the Pandemic.
2 – The mortgage interest rate for a 30-year fixed loan actually decreased last week, from 5.25% down to 5.1%. It clearly has immediately affected the market, which is what the Fed’s intention was. They may slow future increases. Make sure your serious buyers are locking in their interest rates and that that lock includes a ‘float down’ feature. That means if it goes DOWN again, they lock in at those lower rates.
3 – Inventory is rising… finally! According to Axios, inventory is up 8% year over year. Homes that used to take 24 hours to sell are now taking up to 30 days. Great news for your buyers who are sick of competing and giving so many concessions to the sellers.
4 – There are zero indicators of a pending housing crash. Homeowners have equity, they’ve locked in super low rates and can walk away with cash IF they actually decide to sell. Unemployment is low and demand continues to be very high. There is very little subprime, so at-risk homeowners are few and far between. Lenders are more willing to do forbearances or modifications. Stop thinking there’s going to be a crash.
Note: 45% of homeowners are currently ‘equity rich. This means they have 50% or more equity in their homes. Even if they were to fall behind in payments, they still walk away with equity. That equity is literally growing as I type this point.
Only 3.2% of mortgages are underwater currently.
5 – Buyers are gaining some control back. While it’s still unquestionably a seller’s market, fewer showings mean sellers are more appreciative of the offer or offers they DO get after a couple of weeks on the market. This does NOT mean you should be lowballing, but it does mean you may be able to get inspections and appraisals accepted. Sellers are getting fewer free possession days as well. This all depends on the subject property. Some are hot and some are not.
6 – New construction starts continue to rise. The builders are building 15% more new homes than last year. Lumber prices are actually coming down. The overall cost inflation for new construction materials is down versus this time in 2021. Make sure you know your builders. Some are even having some inventory homes come available and many are paying normal buyer side commissions again.
7 – Second-home markets are being affected by the slowing buyer traffic. Look for opportunities for yourself as well as your buyers and investors. This is an especially good opportunity for those who are still fleeing cities due to the new work-from-home job environment.
8 – 15% of active listings saw price reductions last month. If a seller is on the market long enough to reduce their price, they’ll probably be more appreciative of offers from your buyers. This is also an early indication that prices are becoming less crazy, the market less frothy, and best of all for our proactive lead generators… Expireds will be increasing!
9 – Bidding wars are cooling off. Longer days on the market equals less over-bidding, guaranteeing appraisal gaps, and waiving inspections. This will be a less stressful environment for buyers, buyers agents, and even the listing agents who won’t have to wade through so many offers.
10 – FHA, VA, and smaller down payment buyers are actually getting into contract in many areas of the country now. This is due to the almost immediate bowing out of many cash investors who are already waiting for prices to stabilize.
11 – Skilled, caring and competent agents are poised to build up their listing inventory immediately, creating stronger, more profitable businesses. The amount of inventory coming soon is increasing for those agents. They know how to properly educate their sellers on what to expect without freaking them out. The most skilled agents are already pouncing on the opportunities that this new market is presenting them.