Real estate agents confirm what housing data is starting to show: More homebuyers are emerging from their self-imposed hibernation.
The volume of mortgage applications for home purchases rose 25% week over week, the Mortgage Bankers Association (MBA) survey for the week ending Jan. 13 found. Housing sentiment ticked higher at the end of last year, per Fannie Mae. And home builders are reporting an increase in buyer traffic in January, the first uptick since December 2021, according to an industry survey.
These buyers are hoping to reap the rewards from a more favorable market, bagging seller incentives along with a slightly lower mortgage rate, before the spring-buying season attracts more competition.
“I had one of my clients at Meta and another from Microsoft who were active up until September of last year reach out to me last weekend,” Jeff Reynolds, a broker at Compass and founder of UrbanCondoSpaces.com, told Yahoo Finance. “They had wanted to see what the market would do, and since it seems to have stabilized and rates are down, they are hoping to get a step ahead of what would inevitably be a real estate bottom.”
Home sellers are more likely to offer buyers concessions, a Redfin report found. At least 42% of homes sold during the fourth quarter of 2022 included an incentive. (Credit: Getty Creative).
‘Bringing people back in’
The dip in mortgage rates in recent weeks has taken some of the edge off of the record-setting ascent rates clocked in last year. Last week, the average rate on the 30-year fixed mortgage — the most commonly used home loan for a purchase — settled closer to 6% than 7%, fitting into more buyers’ budgets.
“Interest rates are better for first-time buyers. I think naturally it’s just bringing people back in,” John Downs, senior vice president at Vellum Mortgage, told Yahoo Finance.
At the same time, home prices have also softened, with the median list price falling to $400,000 in December, according to Redfin, down 11.1% from June’s peak of $449,000.
“The majority of activity is from new buyers,” Reynolds said. “In our microclimate in downtown Seattle, the majority of activity has hit really affordable price points. That’s driven mostly by that millennial buyer, that younger buyer, or first-time buyer finally taking advantage of market conditions — maybe for the first time.”
‘Picking for deals’
The buyers who are coming back are also getting gutsy, knowing that the sellers who remain in the market are open to negotiation.
“In 2022, buyers set the market by bidding up, which led to escalating prices and essentially having to pay to win,” Downs said. “Now, instead of waiting for listing prices to drop, buyers submit offers with big discounts and make the seller make a decision. And that seems to be working.”
At least 16.6% of homes sold in December had a price cut, Realtor.com data found, an increase from 7.1% a year ago. Even home builders are squishy on price.
One of Monte Miner’s clients got $15,000 off a newly built home originally priced at $409,000, according to the real estate agent at Ironwood Fine Properties in Arizona.
Rick Nazarro of Colonial Manor Realty talks with a pair of interested buyers in the driveway as a couple waits to enter a property he is trying to sell during an open house in Revere, MA. (Credit: Blake Nissen for The Boston Globe via Getty Images)
“Buyers are coming back, but they are picking for deals. Let’s say a house is listed for $400,000 — a lot of the offers coming in are under that number,” Miner said. “Some sellers’ pricing expectations are stuck in the past, like three months ago. It’s different now.”
Not only are some folks getting big price reductions, they are also snagging seller concessions to further ease the burden of still-high home prices.
For instance, at least 35% of builders reduced their home prices in December, data from the National Association of Homebuilders found. Another 62% of builders continued to use incentives to attract buyers, including rate buy-downs and paying points. According to Redfin, roughly 42% of homes sold in the final three months of 2022 included a seller concession, such as cash for repairs or closing costs.
“If you don’t haven’t enough money for closing costs,” Downs said, “sellers are offering to pay it for you,”
A sign is posted in front of new condominiums for sale on December 19, 2022 in Los Angeles, California. (Credit: Mario Tama/Getty Images)
Timing is everything
With rates finally inching down, now could be an opportune time to purchase a home before the spring season is in full swing, Downs said. But you need to be prepared. Having a pre-qualification ready, setting a budget, and talking to a real estate expert can increase your chances of negotiating a better deal at closing.
According to Miner, stepping into the market before it gets flooded by competition could be a good move if you want to negotiate terms.
“From what I’m seeing,” Miner said, “I feel like the bottom is here.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
