Prices continue to increase YoY. However, the slowdown I’ve been feeling in the market is starting to creep through as prices MoM are down. Overall, they’re only down by 1%. However, house prices were down almost 2.5%, but it was condo prices that were up 2.25% that helped to reduce the MoM decline.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
-10% |
+4% |
|
New Listings |
-2% |
-1% |
|
Homes in Escrow |
-8% |
-3% |
|
Closed Sales |
-7% |
Flat |
|
Median Sale Price |
+3% |
-1% |
Yet again, closed sales MoM continue to bounce up and down. In September, they were down 19%. Now there’s no change MoM. This market continues to be hard to predict. Keep in mind a typical escrow is 30 days. The rates were in the low 7’s when most of the October sales entered escrow, and not in the 8’s like we’ve seen very recently. So, it will be interesting to see how those high rates affect November closings.
Rates
Last week, we saw some very positive downward movement with the 10-year treasury, and it’s down to the lowest it’s been for the past month. That caused interest rates to drop around .5%, but they already increased slightly yesterday. If you want to get an even lower rate, now is a good time to ask your lender what the current adjustable-rate mortgage (ARM) rates are. These are usually lower than the 30-year fixed rate. ARMs received a bad rap during the Great Recession. However, lending laws are much tighter now, and only correctly vetted buyers will get approved for one. An ARM rate is typically locked in for 7 or 10 years. And it would be a safe bet to assume rates will be lower within that time than now, allowing you to refinance before the lock expires.
Time to Get a Deal
With prices on the way down, now is the first time all year to get a deal. The best homes to target are ones that have been on the market for a few months—also, new construction or flipped homes. Most investors will be worried about prices coming down even further, so they would rather get out now than wait to see what next year brings. If you buy now, will prices continue to drop after you buy the home? Maybe? However, given we’ve been in an unprecedented market for the past 3.5 years, that’s hard to answer. As I’ve always said, if you find a home that you have to have and you can comfortably afford it, then it could be the right time to buy.
Buy Vs Rent
The cost of buying a home versus renting one has been at its highest since the mid-90s. The average monthly new mortgage payment is 52% higher than the average rent, according to a recent CBRE analysis. Data like this will convince more buyers to stay on the sidelines, and understandably so. By remaining a renter, a buyer can continue saving for a down payment and not feel like they’re stretching. Unfortunately, this will help contribute to the anticipated flood of buyers who will enter the market at the same time when rates come down and, in turn, cause prices to increase rapidly. Especially given that first-time homebuyer price points will be the hottest-contested homes.
Rate Buydowns
With rates at recent all-time highs, a way of reducing your rate into the 5’s is by using a temporary buydown. This entails the seller paying your lender to buy down the rate as part of your negotiation. Typically, this will be a 2-1 buydown, where if the current rate is 7%, your rate will be 5% for the first year. In the second year, it will be 6%, and in the third year, it will return to 7%. This greatly reduces your mortgage costs for the first two years. Check with your lender about the specifics of your situation and if a buydown matches your goals.
