The U.S. housing market is undergoing a major shift, and affordability continues to be an obstacle for buyers and sellers. Mortgage rates have doubled since March, and home prices remain elevated due to a limited supply of homes, although price gains are slowing at a quickening pace. As a result, many homeowners are waiting until market conditions improve to sell their home, while other Sellers are increasingly cutting prices and offering concessions to attract a greater number of buyers.
This year as rates exploded higher, the inventory grew from 1,254 homes at the start of the year to a peak of 4,806 at the start of August. It stopped rising early and has dropped to 4,317 as of October 2022.....which is 62% fewer than the 3 year average prior to COVID (2017-2019). As a result of sky-high rates homeowners are opting to not sell. They do not want to trade their incredibly low monthly mortgage payment where more than 67% of homeowners with a mortgage are enjoying a rate at or below 4%. Many homeowners are hunkering down and opting to stay even if they have an itch to make a move.
As long as the sky-high mortgage rate environment continues, expect demand to remain muted, values to slowly drop, and fewer homeowners willing to participate in today's housing market as they continue to hunker down. Expect inventory to fall even more during the Holiday Market, from the week before Thanksgiving to New Year's Day, as far fewer homeowners opt to sell during the festive season and many unsuccessful sellers throw in the towel and pull their homes off the market.
The remaining active buyers are continuing to remain patient and exploring multiple neighborhoods based on price that will suit their needs. Lenders are getting creative with different rate programs to qualify these Buyers if getting a loan. Many Buyers are opting for a large seller credit to buy down their rate or seeking adjustable mortgages with the expectation that rates may come down in the next 5+ years and they will refinance at that time.
Please call me direct at 858-220-6412 if you have specific questions about buying or selling in today's market as every situation is different.
This year as rates exploded higher, the inventory grew from 1,254 homes at the start of the year to a peak of 4,806 at the start of August. It stopped rising early and has dropped to 4,317 as of October 2022.....which is 62% fewer than the 3 year average prior to COVID (2017-2019). As a result of sky-high rates homeowners are opting to not sell. They do not want to trade their incredibly low monthly mortgage payment where more than 67% of homeowners with a mortgage are enjoying a rate at or below 4%. Many homeowners are hunkering down and opting to stay even if they have an itch to make a move.
As long as the sky-high mortgage rate environment continues, expect demand to remain muted, values to slowly drop, and fewer homeowners willing to participate in today's housing market as they continue to hunker down. Expect inventory to fall even more during the Holiday Market, from the week before Thanksgiving to New Year's Day, as far fewer homeowners opt to sell during the festive season and many unsuccessful sellers throw in the towel and pull their homes off the market.
The remaining active buyers are continuing to remain patient and exploring multiple neighborhoods based on price that will suit their needs. Lenders are getting creative with different rate programs to qualify these Buyers if getting a loan. Many Buyers are opting for a large seller credit to buy down their rate or seeking adjustable mortgages with the expectation that rates may come down in the next 5+ years and they will refinance at that time.
Please call me direct at 858-220-6412 if you have specific questions about buying or selling in today's market as every situation is different.
Ben Anderson
License DRE# 01369906
Broker DRE# 01767484
1111 Prospect Street, Suite 100, La Jolla, California 92037
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1111 Prospect Street, Suite 100, La Jolla, California 92037
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