By Living Room Realty, November 16, 2023
The Fall real estate season kinda landed with thud this year. Activity did pick up after Labor Day, but it never really took off like it often does in September. What does that look like? Hot new listings get some activity out of the gate, but it takes a week or two for a single offer to develop. Properties with any issues (location, condition, price) tend to languish and perhaps do several price reductions to get any traction. There are some outliers that get 2 or 3 offers in the first weekend; for years this was the rule…currently it is the exception.
Buyers have been able to reap the rewards of this mostly in the form of concessions for repairs/rate buy-downs. As a whole, prices have not come down significantly, but on any individual property…you might be able to get a good deal. Today there is a good bit of inventory out there, but some of it is junk and has been picked over pretty hard.
The truthiness of these statements does vary depending on which price point you are looking at. The block of buyers that has benefited the most this year are first timers. Competition is still out there, but it is a fraction of what it has been for the past decade. Sure, the monthly payment stinks (for now at least), but they are in and can start enjoying the upsides of home ownership.
Rates were bad in July (upper-6% to lower-7%), things got progressively worse into late October (when we touched the sun at 8%) and in the past few weeks things got better pretty dramatically (earlier this week lenders were quoting just over 7%). Still not great, but finally trending in the right direction. The rates matter a lot, but I would argue that buyer sentiment matters even more. When rates shift like this it takes a few weeks/months for buyers to re-engage with the market. IF rates continue to move in the right direction AND a large group of buyers choose to jump back into the search in January, we could be right back into multiple offer territory in early 2024.
I’ve sat through several economics seminars this year and predictions have been all over the map with various degrees of accuracy. There is however one really good nugget that I picked up a few months ago: The Federal Reserve is supposed to be non-partisan. In election years, to display their neutrality, they tend to avoid making any large adjustments up/down once we get into the election season proper. In theory, whatever rates we are looking at in Q1 of 2024 could be the rate through November. I’m not going to hang my hat on this…but it will be interesting to see how it plays out.
That is the 30,000 ft view. If you’d like the hear the more nuanced version…give me a call!!
