Home buyers have accepted the new normal of 7% mortgage rates, but now they\u2019re feeling a sense of d\u00e9j\u00e0 vu as real-estate is back to being a competitive sport in many parts of the U.S.<\/p>\n
At the beginning of this year, buyers were still holding on to hope that mortgage rates would go down \u2014 they didn\u2019t \u2014\u00a0and business waned for real-estate agents like Aaron Lanning, a real-estate agent with Century 21 based in Menifee, a city in Riverside County, Calif.\u00a0<\/p>\n
\n
\u201cBusiness was just gone,\u201d Lanning told MarketWatch, looking back at February and March. But all of a sudden, at the end of March and April, the machine sprang to life again: Buyers were biting the bullet of higher rates and purchasing homes.<\/p>\n
But as they\u2019ve braved the market, buyers are contending with a slew of challenges. Higher mortgage rates present one new obstacle, but they\u2019re also contending again with some of the challenges of the pandemic-era real estate market. All-cash offers, bidding wars and waiving contingencies like home inspections and appraisals are all in the mix.\u00a0<\/p>\n
In Chicago, real-estate broker and investor Rashauna Scott saw a similar change among buyers.<\/p>\n
\u201cWe\u2019re definitely seeing a lot of competition,\u201d Scott told MarketWatch in a recent episode of Barron\u2019s Live. \u201cThere\u2019s a lot of competition because the inventory is getting taken up and not only just by home buyers, but you\u2019re also competing with investors in that same space,\u201d Scott, who specializes in multi-family units, added.\u00a0<\/p>\n
Low inventory is another hurdle for today\u2019s buyers. The number of homes for sale in May was 1.4 million \u2014 the lowest level since Redfin RDFN began recording the data in 2012, the real-estate brokerage noted in a report published Wednesday.<\/p>\n
The number of new home listings for sale dropped 25% from the same period last year, the company added.<\/p>\n
\u201cAs the pool of homes for sale shrinks, homebuyers in many markets are grappling with competition, which is preventing home prices from plunging despite a cooldown in buyer demand brought on by elevated mortgage rates,\u201d the report stated. Nearly half of the offers written by Redfin agents in May faced at least one competing bid, the company said.<\/p>\n
Down south in Miami, Rafael Corrales, a real-estate agent with Redfin, told MarketWatch that he continues to see a steady stream of out-of-state buyers from places like New York, New Jersey, California, as well as foreign buyers from as far as the Middle East and Asia.\u00a0<\/p>\n
\u201cWe\u2019re still seeing increases in our home prices,\u201d he said. But \u201cthe real elephant in the room is\u2026 the lack of inventory,\u201d he added, which along with high mortgage rates is making the market very challenging for buyers.<\/p>\n
Where is Corrales seeing the most competition in Miami? Homes that are renovated and updated in areas like Coral Gables, Coconut Grove, and other affluent neighborhoods are selling \u201cwithin a very short period of time,\u201d Corrales said.\u00a0<\/p>\n
Buyers are getting frustrated by how competitive the Miami real-estate market is, he added. The single-family homes in desirable areas are \u201cgoing to always have the competitive, multiple offers situation,\u201d Corrales said. Plus, most first-time buyers are competing with cash buyers at this point, he added, given how high mortgage rates are.<\/p>\n
Corrales\u2019 top tip for buyers<\/strong> who want to be competitive is to get all of their financing in order, and particularly, be prepared to offer a larger earnest money deposits, to show that they\u2019re serious. \u201cThe more skin in the game, the better it\u2019s going to improve their chances of having their offers awarded,\u201d he said. Earnest money deposits refer to money the buyer puts down before closing on a home to show they intend to follow through on the purchase.<\/p>\n\u201cWe gotta go back to our old 2021 and 22 ways right now,\u201d Corrales said. \u201cAnd that would be just being a little bit more flexible with the contingencies that we may need to be\u00a0waiving\u00a0to make our offers as competitive and aggressive as possible.\u201d<\/p>\n
Back in Riverside, Lanning said that if a house is priced at market value, it is \u201calmost guaranteed\u201d to get a minimum of two offers. In the last month, he sold seven homes, he said, and 22 people showed up at the last open house.<\/p>\n
But that\u2019s nothing compared to the frenzy of the pandemic days, he added: In July 2021, he had an open house where 96 people visited in one day. Overall, during the COVID years, he generally had 30 to 40 people visit his open houses, he added.\u00a0<\/p>\n
Right now, that number has dropped to around 15 to 20, he added.<\/p>\n
Lanning\u2019s top tip for buyers <\/strong>is to adjust their expectations.\u00a0<\/p>\nHe described a Los Angeles-based client who was looking to move to Fontana, another city in California, who ended up looking at homes eight or nine times. That was unusual. Most buyers end up choosing a home after four or five. Each time this client lost out on a potential purchase, it was due to being outbid by a competing offer, or because of issues with the appraisal.\u00a0\u00a0<\/p>\n
It\u2019s pretty much a seller\u2019s market at this point, Lanning said.\u00a0<\/p>\n
\u201cLow interest rates turned a lot of homeowners into landlords,\u201d he said. \u201cThey don\u2019t want to get rid of this home that has a 3.5% mortgage, they want to rent it out. That\u2019s hurting us.\u201d<\/p>\n<\/p><\/div>\n
Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Home buyers have accepted the new normal of 7% mortgage rates, but now they\u2019re feeling a sense of d\u00e9j\u00e0 vu as real-estate is back to being a competitive sport in many parts of the U.S. At the beginning of this year, buyers were still holding on to hope that mortgage rates would go down \u2014 […]<\/p>\n","protected":false},"author":1,"featured_media":26168,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-26167","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n
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