Written by Kelsey Lane
I thought you may like a distilled version of the real estate news I've been reading this month. A few key points:
- Rental prices have increased 23% in the last 3 to 4 years. During this time an extra 2 million households in the US have fallen into the "cost-burdened" category, totaling 22 million. Cost-burdened households are paying more than 30% on rent.
- New construction homes are becoming both more prevalent and more popular. The amount of available new construction homes is up to nearly 31% (up 5% from the same timeframe 2 years ago) and Q3 saw a 12.3% increase in new construction purchases. Why? Builders have been offering rate buy-down concessions, and sellers of existing homes have been reticent to put their homes on the market due to high mortgage rates.
- The Fed's November meeting saw the federal funds rate unchanged and mortgage rates have been at their lowest since September (8% 23-year high).
- Some sellers of existing homes have begun to offer buyers rate buy-down concession credit. Some lenders have been offering programs where buyers can pay 5.5% the first year of their loan, 6.5% the second year and so on.
- Many analysts believe rates will be 5.5 by the end of 2024. Many Realtors perceive it's a good time to buy a home since competition is low, and homes may be able to be refinanced later as rates decline.
- A "bombshell" lawsuit saw a verdict last week in Missouri regarding Realtor commissions and practices. Called Sitzer Burnett vs. Nar et al, I'm happy to answer any questions you have (call, text or email). This suit may affect how real estate is practiced in all of the United States.
My market mashup interpretations: Buyers can look to either sellers of existing homes or new construction for rate buy-downs which are becoming prevalent, and avoid some amount of the competition we were seeing previously. My advice is always to purchase the home that is right for you and your lifestyle, that you can afford, and love enough to weather economic storms. Sellers will likely need to offer a rate buy-down as part of the selling package, to prospective buyers. Realtors will need to reiterate to their sellers that commissions are negotiable. Sellers will also need to keep in mind that enough commission will need to be offered in order for listing agents to provide services & buyer's agents to be able to show and sell their properties. Quality of life is important, and renting or buying homes that are within a reasonable budget remains a factor for us all to remember and practice.
Kelsey Lane has been a Realtor in the Silicon Valley since 2003 and is a Master Certified Negotiation Expert through the Real Estate Negotiation Institute, specializing in listings. She is also coaching certified through the Life Purpose Institute and approaches her real estate business through the eyes of a life coach. Cal-DRE #01390557