Housing inventory remains 40% lower than pre-pandemic levels, tips for real estate agents?
A Deep Dive into the Factors Shaping the National and Local Real Estate Landscape
In this article, we’ll delve into the housing market’s current state, highlighting critical data and statistics to help prospective homebuyers make informed decisions.
Key Points:
1. The housing market is moving towards a more balanced state, but there are still considerable differences between regions, cities, and neighborhoods.
2. Mortgage rates, which are hovering around 6.5%, have doubled in 2022, making mortgage payments 45% higher than a year ago and double what they were in 2020.
3. Housing inventory remains low, 40% lower than pre-pandemic levels, keeping competition for well-priced homes strong.
4. Mortgage rates tend to follow the yield on the 10-year treasury and are influenced by inflation and economic outlook.
5. There is a significant east-west divide in the US housing market, with prices falling in the west and rising in the east. The highest price gains have been observed in Miami (12%), Orlando (9.3%), and Buffalo (8.3%).
6. The reasons for this regional divide include the west’s expensive cities, affordability crunch, rapid price gains during the pandemic, and local differences in housing markets.
7. Lower housing inventory can be attributed to low home building activity post-global financial crisis, millennials entering the market, and lower mortgage rates at the beginning of the pandemic.
8. Buyers should focus on understanding what they can afford, improving their credit scores, taking advantage of down payment assistance programs, and working with real estate agents.
The National Housing Market: A Mixed Bag
As mortgage rates hover around 6.5%, the housing market is inching toward a more balanced state. However, according to Orphe Divounguy, a senior economist at Zillow, it’s crucial to understand that markets are local, with every city and neighborhood experiencing different trends. For instance, data from mortgage firm Black Knight reveals a significant divide in home price trends between the eastern and western halves of the US. While prices are down year-over-year in major western metro areas such as San Francisco and Seattle, prices continue to rise in the Midwest, southeast, and northeast.
Low Housing Inventory: The Driving Force Behind High Prices
Inventory levels are currently 40% lower than pre-pandemic levels, causing fierce competition for well-priced and move-in ready homes. This situation can be traced back to the aftermath of the global financial crisis when builders scaled back on construction. This shortage was further exacerbated by the increased demand for housing and lower mortgage rates during the pandemic.
Mortgage Rates: The Key Indicator for Homebuyers
Interest rates and mortgage rates play a significant role in the housing market’s health. As Orphe Divounguy explains, the 30-year fixed mortgage rate typically follows the yield on the 10-year treasury, which is influenced by factors such as current inflation and economic outlook. As inflation continues to rise, so do mortgage rates – and that affects the purchasing power of potential homebuyers.
Guiding Homebuyers Through the Complexities of the 2023 Housing Market: Tips for Real Estate Agents
In light of the current market challenges, real estate agents play a crucial role in assisting homebuyers. Here are some suggestions for agents to better guide their clients through the process:
1. Help clients assess their financial capabilities: With high prices and mortgage rates, it is essential for buyers to understand what they can afford. Assist your clients in evaluating their finances to make well-informed decisions.
2. Encourage clients to secure financing first: Advise homebuyers to work with a mortgage professional early in the process, as it can help improve their credit score and save them money in the long run.
3. Inform clients about down payment assistance programs: Many local programs can help alleviate the financial burden of buying a home. Educate your clients on these opportunities and guide them through the application process.
4. Be the knowledgeable agent your clients need: Stay up-to-date on both national and local real estate trends, and use your expertise to help your clients find a home that fits their requirements and budget.
As real estate agents, it’s vital to stay informed about the trends affecting the housing market and share this knowledge with your clients. By understanding these factors and offering strategic guidance, you can help homebuyers successfully navigate the complexities of the 2023 housing market.
Real estate agents can face difficulties in a low inventory market, but there are strategies they can employ to succeed. It’s important to stay up-to-date on the market, prioritize listings, work with buyers, build relationships with other agents, be innovative with financing options and use cutting-edge technologies to stand out during the listing presentation, and focus on cultivating long-term relationships with clients. By implementing these tactics, agents can thrive even in challenging market conditions. Overwhelmed and looking for some help? Listing3D has got you covered. Schedule a demo with us.
Additional Services
Take Your Marketing Even Further
Additional Features at no cost
Part of any package
Press
Easy and Fast
Easily differentiate yourself from your competitors with our 3D Marketing Package. What used to be very expensive, is now affordable.
