With mortgage interest rates at all-time historic lows, an estimated three million people bought homes from March 2020 through August 2022, creating a housing frenzy.
Today, heavily influenced by inflation and higher interest rates, the market is vastly different than it was a year ago. Thinking of dipping your toes in the housing market soon? Here are four new realities about buying a home right now.
Home prices are cooling down
Driven by interest rates and inflation, home prices are cooling down.
In major housing markets, home prices are up year over year, but down significantly from where they were at the height of the pandemic housing frenzy in May 2022.
Along with home prices cooling, new data states that recent home sales sold 22% above their final list price, which is down from 40% a year earlier, and the lowest level since March 2020.
You can ask for concessions
In the height of the pandemic housing craze, buyers wouldn’t dare ask sellers for anything, with many even presenting cash offers. But now, as the market cools and the tide shifts, that is no longer the case for buyers.
Sellers no longer have all the power. In fact, a study released in January 2023 shows that more than two out of five sellers made concessions for buyers in December 2022. This is a trend we predict to only increase. Concessions included money towards repairs, closing costs and/or mortgage-rate buy-downs.
You have more time to make a decision
The latest data indicates that homes are spending an average of 67 days on market nationally, up significantly from this time last year, where homes were spending an average of 56 days on market.
Sellers are also becoming increasingly flexible on closing dates, tipping the scales in favor of what works best for the buyer.
There is more inventory
Housing inventory is the best indicator of the type of market we are currently in and whether it benefits buyers, sellers or is balanced. National data shows us that there is an average inventory supply of 3.3 months.
Overall, five months of inventory supply indicates a more balanced market, while a three months supply of inventory indicates a sellers market. As the numbers continue to increase towards the five month mark, we realize there is considerable more inventory on the market today than this time last year.
Bottom line: The housing market is changing quickly. Make sure to align yourself with a Howard Hanna realtor to stay on top of the latest data in your local market.