4 Indications The Market is Balancing | DOBI
 

4 Indications The Market is Balancing

...and Here's Why

When purchasing a home this time last year, buyers were met with bare inventory, bidding wars pushing offers over the asking price, and waived inspections (which we highly do not recommend). While it’s been hard for our buyers out there, every seller’s market does eventually have an end. But now, we’ve started to shift into a more balanced market. Today we’re breaking down a few reasons behind the shift in the market.

MORE HOMES ARE AVAILABLE

There is some real cause of buyer optimism here: The Realtor.com June Housing Report shows an uptick in the number of homes for sale for the second straight month. Compared to last year, the new listings this June grew by 18.7%, which is the largest growth margin for this report’s history.

With buyers seeing more homes on the market, this also means more options for them to consider in their home search, compared to last year where many buyers felt discouraged after losing to many bidding wars. We’re also seeing more options for multi and single-family housing are there that weren’t available just a few short months ago are now available for buyers.

“The shift in increasing inventory paired with the rising interest rates has much to do with how we’re moving more toward a balanced market, compared to last year where the sellers had more leverage. The franticness is subsiding, and more buyers are taking a day see the homes they are interested in, and are able to negotiate with the seller. Home ownership is still the American dream. At DOBI, we pride ourselves on our agents helping each other out and taking advantage of the opportunities here in the office with other agents.”

– DOBI CEO, Simon Thomas

HOMES ARE STAYING ON THE MARKET LONGER

When homes stay on the market longer, it typically signals that buyers are not as desperate to purchase them or they are considering other options. They aren’t experiencing the urgency or feeling of desperation compared to last year. And, because of this sellers have lost a bit of leverage.

According to Realtor.com, for the month of June on a national level, the typical home spent 31 days on the market—five fewer days than the same time last year. Here in Michigan, the average days on market for Oakland, Wayne and Macomb counties this June were 22, 21, and 25 days respectively. At DOBI, our listings were on market for an average of X days.

PRICE REDUCTIONS ARE ON THE UPSWING

Overall, U.S. housing prices are still rising. The median national home price for listings grew to a new all-time high of $450,000 in June, up 16.9% compared to last year. However, even if some homes might be listed high, many of them are having to be reduced in order to sell. In fact, the June Realtor.com report shows that 14.9% of listings decreased their price that month.

We continue to see price reductions happen in our area in order for the homes to sell quicker.

MORTGAGE APPLICATIONS DROPPING

Right now, there are fewer people applying for mortgages, which means there are fewer buyers willing to make an offer on a home. In the first two weeks of July, mortgage applications declined for the second straight week, according to the Mortgage Bankers Association. Purchase applications for loans continue to be slower due to the combination of rising mortgage rates and our struggling national economy.

Higher interest rates also make borrowing costs more expensive. As rates jumped from about 3.1% in December 2021 to 6.0% in June 2022, the typical monthly mortgage payment increased to about 60% higher than last year. With fewer buyers out there and a greater supply of homes, they will have a lot more leverage with sellers than they had before.

Source:
Realtor.com