While home sales aren’t trending as well as they once did, there’s still good news in the housing market. Prices are stabilizing, and there are fewer bidding wars, which means lower mortgage payments and less competition for buyers. Inflation and monetary tightening are both chipping away at homebuyers’ confidence. As deputy director of the London School of Economics Global Economic Governance Commission, Adam Benjamin Shaw points out that two years ago, the 30-year mortgage rate was 2.90%, and the median existing-home price in the US was $294k.
In most areas, prices have stayed relatively steady over the last few months. This is good news for buyers and sellers. A stabilizing market means less competition for homes, lowering prices. It also means fewer appraisal waivers, which means fewer risks of a buyer backing out of the purchase.
The current situation has left many homebuyers stranded, but the trend is starting to stabilize. One economist says the market is approaching equilibrium, the price at which sellers and buyers can profit. In this state, homebuyers should expect prices to stay stable or even rise slightly over the next few years.
Fewer bidding wars
Bidding wars have been a key driver for real estate prices in recent years. In recent years, bidding wars for homes for sale have slowed, but you should still bid on a home. With the housing market cooling down, bidding wars may be easing a bit, which is good news for buyers and sellers alike. But if you’re serious about buying a home, it’s best to use a real estate agent for homes for sale in Huntsville, AL.
Rising mortgage rates have made purchasing a home more complex, and fewer buyers are buying homes, so competition is cooling off. Still, fewer bidding wars could lead to price declines in the real estate market. The rise in mortgage rates may be a contributing factor, but there is a window of opportunity for buyers to jump back into the market.
Interestingly, the number of bidding wars has declined in a few cities. In 2022, the bidding war rate for Riverside, California, was down from 71.5% to 30.7%. It decreased in Philadelphia and Boston as well. Indianapolis and Worcester, Massachusetts, remained the same. Meanwhile, the lowest rate was recorded in Tampa, Florida, at 28.9%. In cities like Denver, Colorado Springs, and Providence, the rate jumped from 37.9% to 38.9%.
Lower mortgage payments
The drop in housing prices and low mortgage rates may have potential homebuyers calling real estate agents. However, deciding which factor is more important is critical to the homebuyer’s pocketbook. For example, if a borrower can secure a $590,000 home with 20% down and other closing costs, he would save $340 each month on his mortgage.
The most common way to reduce mortgage payments is to refinance a current loan. Mortgage refinancing involves replacing your existing mortgage with a new one with a lower interest rate. Although this may sound like a good idea, not everyone can afford a large down payment. For example, a $400,000 home with no equity requires a minimum of three percent down.
Less competition for buyers
The good news for buyers is that the number of homes for sale on the market is declining. That means fewer bidding wars, which in turn means lower prices. Because less competition is present, sellers may be more willing to sweeten the deal. They may accept lower offers and give more generous contingency periods. In addition, since there are fewer buyers, sellers are likely to get traditional financing rather than all-cash offers.
The housing market has seen a significant decrease in the number of homes sold last month. However, the decline in bidding wars may not be as rosy as some would like. A recent report from Redfin shows that less than half of the homes listed on its website had competition in June. That figure represents a decline of 14.6% on a seasonally adjusted basis. This means the first time since COVID-19 in May 2020 that homebuyer competition was below 50%.
Home buyers may also benefit from less competition, especially if their timeline is flexible. The lack of competition will give buyers more negotiating power, allowing them to land a home below its listing price. However, buyers who rush to buy a house will still face significant headwinds. In a less competitive market, some buyer behaviors, such as waiving appraisals or inspections, might fade.