What are real estate professionals seeing on the ground?
The bottom line: a pronounced drop in consumer demand.
Added O’Brien: “So, things are lasting a little bit longer on the market. Days on the market is up. But the median sales price is still up 9% or so year over year. But buyer demand has certainly slowed down with those rising interest rates.”
The trio also noted the rising prevalence of buyer’s concessions — nearly 42% of home sellers gave such incentives during the last three months of 2022, according to Redfin. Such concessions include lower closing costs, money toward repairs, and an increase in mortgage-rate buy-downs. For instance: an increase of “2-1 buy-downs,” an agreement that allows homebuyers to pay lower interest rates on the first two years of their mortgage loans.
“That’s what’s really helping buyers … get into the houses that they want, too, because affordability is key here in Colorado,” said Casey. “Just to give you some perspective, our home prices have doubled in the last 10 years. And so wages just can’t keep up with that. So, anything to help the buyers get into the house is what sellers are doing right now.”
O’Brien said the same thing is happening in Indianapolis. “People are getting creative with the mortgage lending. Different banks are offering different types of mortgage products to help with that increased mortgage rate,” said O’Brien.
Despite softer demand, North Carolina remains one of the most popular markets. (Zillow recently ranked Charlotte the number one hottest housing market.) Harrison said now might be the time to buy. “If you have been on the margins and could not get your offer accepted in the past two years, now is the time to move. Although interest rates are a little higher, you’re not competing with as many people.”
All three experts ultimately predicted that mortgage rates would fall by the end of the year along with an increase in buyer activity. Mortgage rates currently sit at 6.33% for a 30-year conventional loan, according to Freddie Mac’s Primary Mortgage Market Survey. That’s compared to the 3.45% during the same time last year.
“So, if you’re looking to buy, don’t wait because you want to get out there before the rest of the market jumps back in that’s been on the sidelines,” Casey said.