Buying and Selling in Today’s Market

It is fair to say that the recent real estate market has been nothing short of crazy and confounding! It has been challenging for everyone involved in the escrow process, including buyers, sellers, realtors, loan officers/lenders, and title companies. Fluctuations in the economy and interest rates have made it difficult for buyers to know if it is a good time to buy and sellers to know if it is a good time to sell. It takes acumen to appropriately price homes and to know what constitutes a “good deal” in today’s market.

Buyer Considerations

  • According to Freddie Mac, 30-year fixed-rate mortgage rates averaged 6.57% to open the month of June 2023 and dropped 0.375 percentage points when Congress reached a budget deal.
  • At the time of writing, the Federal Reserve is expected to pause its streak of Fed Funds Rate hikes on June 14, 2023, after ten consecutive increases dating to last year. Raising the Fed Funds Rate combats inflation, which is favorable for buyers. Although the Federal Reserve does not control mortgage rates, a pause would lead rates downward.
  • Mortgage rates are discounted for eligible first-time buyers, and new mortgage programs reduce fees for buyers who make a low down payment. The mortgage rate discount is part of Fannie Mae and Freddie Mac’s First-Time Home Buyer Mortgage Rate Discount program. The program automatically lowers mortgage rates for low-to-moderate income buyers in all 50 states, regardless of credit score or down payment amount. The program applies to all conventional mortgage loans.
  • Fannie Mae and Freddie Mac also introduced a reduced fee structure for buyers who do not qualify under the above discount program.
  • The Federal Housing Administration recently reduced its annual mortgage insurance premiums (FHA MIP) by 0.30 percentage points for buyers, lowering monthly payments on FHA-backed loans $300 per year per $100,000 borrowed. This is the agency’s first time lowering the FHA MIP since 2015.
  • When demand for homes exceeds supply, prices rise. Buyers should expect higher home prices between now and next season and into next year. Buyers who act quickly will get access to the best homes and prices. Later in 2023, home affordability could be worse.

Seller Considerations

  • We are still in a seller’s housing market.
  • Each state averages fewer than 20,000 homes for sale (as of June 2023).
  • 75% of homes now sell within a month.
  • Sales are climbing faster than available inventory.
  • The supply of new homes is down 2.5 months since last fall.

Tips for Buyers

Below are some tips if you plan to purchase a home in the coming weeks or months.

  • Make sure to obtain a mortgage pre-approval, ideally even prior to touring properties.
  • Mortgage pre-approvals use live mortgage rates and market conditions to show how much home you can afford to buy while setting realistic boundaries for your home search and budget. Every successful purchase starts with a pre-approval, and buyers should obtain one as early in their home search as possible.
  • Work to improve your credit score.
  • Ask for a copy of your credit report and review it for errors.
  • Supplement your monthly bill-paying to pay down debt more quickly.
  • First time buyers may want to explore the first-time buyer discount program mentioned above.

Tips for Sellers

Below are some tips if you plan to list your home in the coming weeks or months.

  • Contact your trusted real estate agent and work together to create a plan which includes a punch list for repairs and possible updates (e.g., painting, landscape).
  • Tackle any deferred maintenance or repair issues.
  • Purge, purge, purge! Streamline your possessions and remove or store items that may clutter the home in the eyes of potential buyers.
  • Deep clean every square inch of your home.
  • In preparation for providing seller disclosures, it is a good idea to gather records and receipts for upgrades, renovations, and repairs. It is ideal to have invoices for big ticket items purchased as well as large repairs.
  • Make a list of all the work you have done on the property (repairs, upgrades, and renovations) to share with potential buyers.
  • Price to sell! We are not experiencing the same buyer frenzy we did a couple of years ago. Work with your agent to set a realistic price for TODAY’S market.

If you are looking to buy or sell, connect with your real estate agent sooner rather than later to put together a strategy for achieving your goals.

 

Debbie Austin is a realtor associate with Keller Williams, Roseville and has been helping clients buy and sell property in the area for 19 years. If you have a specific real estate question you wish to see addressed, contact Debbie at (916) 223-8144 or visit debbieaustinrealty.com.