A Stalled Market - What It Means & What's Next?
The Valley's real estate market has been in a bit of a holding pattern lately, largely due to interest rates keeping both buyers and sellers on the sidelines. However, some upcoming changes could shake things up, and it’s important to know how they might impact your plans.For Sellers: If you’re thinking about selling, you might be reluctant to trade your current 3% mortgage for a new one that potentially doubles your rate. That’s understandable, and it’s why we’re seeing fewer homes being listed and fewer transactions overall.For Buyers: Elevated rates have reduced your purchasing power, making it harder to afford the home you want. But there’s good news on the horizon—the Federal Reserve is expected to cut rates in September. This could lead to a further drop in mortgage interest rates, potentially bringing them down from the current 6.5% range to something even more favorable.What This Means for Buyers: If rates do drop, it could significantly increase your buying power. For example, a 1% drop in mortgage rates can have the same impact on your monthly payment as a 10% drop in home prices. However, there’s a catch: as rates drop, more buyers are likely to jump into the market. This increased demand could drive home prices up, so waiting for rates to drop further might mean facing more competition and higher prices.For Sellers in Today’s Market: If you’re selling now, you’ve probably noticed fewer showings, longer times on the market, and buyers asking for more concessions. This might make the market feel unbalanced, but it’s actually what a balanced market looks like. The market is no longer skewed in favor of sellers as it often is. However, with the anticipated rate cut, buyer demand could increase, which might shorten the time your home spends on the market and reduce the number of concessions buyers ask for.Good News on the Horizon: The market seems to have bottomed out, and there are small but positive signs that it’s starting to turn in favor of sellers again. With the potential rate cut, areas like Cave Creek, Paradise Valley, and Fountain Hills, which are already showing improvements, could see even more activity. Scottsdale and Gilbert are also on the rise. This could be the beginning of a broader recovery in the market. However, cities in the Southeast Valley, like Tempe and Chandler, and Avondale in the West Valley are still seeing some declines to the buyer's advantage - which may quickly change with rate cuts looming.What Should You Do?Sellers: Be patient and stay informed. The market is showing signs of improvement, and if rates do drop, you might see more buyers and better offers. However, be prepared for a bit of a wait and consider making your home as appealing as possible in the meantime.Buyers: Now might be the time to act before competition heats up. If the Fed cuts rates, more buyers will enter the market, which could drive up prices. If you’re serious about buying, consider locking in a rate soon and take advantage of the current low competition.In these times, having a skilled agent who can navigate the subtle shifts in the market and negotiate effectively is more valuable than ever. The market might be challenging, but with the right strategy, both buyers and sellers can still find success. I'm here to help - give me a call at 602-330-6813 and let's put a plan in place to help you reach your goals.
Are We Heading into a Balanced Market?
If you’ve been keeping an eye on the housing market over the past couple of years, you know sellers have had the upper hand. But is that going to shift now that inventory is growing? Here’s a breakdown of what you need to know.What Is a Balanced Market?A balanced market is generally defined as a market with about a five-to-seven-month supply of homes available for sale. In this type of market, neither buyers nor sellers have a clear advantage. Prices tend to stabilize, and there’s a healthier number of homes to choose from. And after many years when sellers had all the leverage, a more balanced market would be a welcome sight for people looking to move. The question is – is that really where the market is headed?After starting the year with a three-month supply of homes nationally, inventory has increased to four months. That may not sound like a lot, but it means the market is getting closer to balanced – even though it’s not quite there yet. It’s important to note this increase in inventory is not leading to an oversupply that would cause a crash. Even with the growth lately, there’s still nowhere near enough supply for that to happen.The graph below uses data from the National Association of Realtors (NAR) to give you an idea of where inventory has been in the past, and where it’s at today:For now, this is still seller’s market territory – it’s just not as frenzied of a seller’s market as it’s been over the past few years. As Mark Fleming, Chief Economist at First American, says:“The faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes.”What This Means for You and Your MoveHere's how this shift impacts you and the market conditions you'll face when you move. Lawrence Yun, Chief Economist at NAR, explains:“Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”The graphs below use the latest data from NAR and Realtor.com to help show examples of these changes:Homes Are Sitting on the Market Longer: Since more homes are on the market, they’re not selling quite as fast. For buyers, this means you may have more time to find the right home. For sellers, it’s important to price your house right if you want it to sell. If you don’t, buyers might choose better-priced options.Sellers Are Receiving Fewer Offers: As a seller, you might need to be more flexible and willing to compromise on price or terms to close the deal. For buyers, you could start to face less intense competition since you have more options to choose from.Fewer Buyers Are Waiving Inspections: As a buyer, you have more negotiation power now. And that’s why fewer buyers are waiving inspections. For sellers, this means you need to be ready to negotiate and address repair requests to keep the sale moving forward.How a Real Estate Agent Can HelpBut this is just the national picture. The type of market you’re in is going to vary a lot based on how much inventory is available. So, lean on a local real estate agent for insight into how your area stacks up.Whether you’re buying or selling, understanding how the market is changing gives you a big advantage. Your agent has the latest data and local insights, so you know exactly what’s happening and how to navigate it.Bottom LineThe real estate market is always changing, and it’s important to stay informed. Whether you’re buying or selling, understanding this shift toward a balanced market can help. If you have any questions or need expert advice, don’t hesitate to reach out. Connect with me at https://linktr.ee/brianeastwoodrealtor. It can be overwhelming, but I’m here to help.
Today’s Biggest Housing Market Myths
Have you ever heard the phrase: don’t believe everything you hear? That’s especially true if you’re thinking about buying or selling a home in today’s housing market. There’s a lot of misinformation out there. And right now, making sure you have someone you can go to for trustworthy information is extra important.If you partner with a real estate agent, they can clear up some common misconceptions and reassure you by backing them up with research-driven facts. Here are just a few misconceptions they can help disprove.1. I’ll Get a Better Deal Once Prices CrashIf you’ve heard home prices are going to come crashing down, it’s time to look at what’s actually happening. While prices vary by local market, there’s a lot of data out there from numerous sources that shows a crash is not going to happen. Back in 2008, there was a dramatic oversupply of homes that led to prices crashing. Across the board, there’s an undersupply of homes for sale today. That makes this market a whole different scenario (see chart below):So, if you think waiting will score you a deal, know that data shows there’s not a crash on the horizon, and waiting isn’t going to pay off the way you’d hoped.2. I Won’t Be Able To Find Anything To BuyIf this nagging fear about finding the right home if you move is still holding you back, you probably haven’t talked with an expert real estate agent lately. Throughout the year, the supply of homes for sale has grown. Data from Realtor.com helps put this into context. While there are still fewer homes on the market than in a more normal year like 2019, inventory is still above where it was at this time last year (see graph below):So, if you’re remembering all that media coverage about record-low supply during the pandemic, you can rest a bit easier. While the market isn’t back to normal just yet, inventory is moving in a healthier direction. And that means as your options improve, you can let go of this now outdated myth because finding a home to buy won’t feel quite so impossible anymore.3. I Have To Wait Until I Have Enough for a 20% Down PaymentMany people still believe you need a 20% down payment to buy a home. To show just how widespread this myth is, Fannie Mae says:“Approximately 90% of consumers overstate or don’t know the minimum required down payment for a typical mortgage.”And if you look at the data from the National Association of Realtors (NAR), you can see the typical homeowner isn’t putting down as much as you might expect (see graph below):First-time homebuyers are typically only putting down 6%. That’s far less than the 20% so many people think they need. And if you’re looking at that graph and you’re more focused on how the number for repeat buyers is closer to 20%, here’s what you need to realize. That’s only because they have so much equity built up in their current house that can be used to make a larger down payment for their next move.This goes to show you don’t have to put 20% down, unless it’s specified by your loan type or lender. Many people put down a lot less. Not to mention, depending on the type of home loan you get, you may only need to put 3.5% or even 0% down. So, if you’re buying your first home, you likely don’t need nearly as much for your down payment as you may think.An Agent’s Role in Fighting MisconceptionsIf you put your move on pause because you heard one or more of these myths yourself, it’s time to talk to a trusted agent. An expert agent has more data and the facts, just like this, to reassure you and help break through any misconceptions that may be holding you back.Bottom LineIf you have questions about what you’re hearing or reading, let’s connect. You deserve to have someone you can trust to get the facts. Reach me at https://linktr.ee/brianeastwoodrealtor. It can be overwhelming, but I’m here to help.
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