October 6th, 2023
Over the past year, housing prices in the United States have seen a notable uptick, primarily due to the increase in mortgage rates. However, Zillow remains optimistic about the prospects of buying a home in this market, provided you have the financial means to do so.
Zillow’s assessment is grounded in its examination of a growing trend among sellers, who are becoming more flexible in their pricing strategies. According to a recent report by senior economist Jeff Tucker, this trend is gaining momentum.
Zillow’s data reveals that in the week ending September 16, approximately 9.2% of home listings experienced price reductions. This figure represents the highest share of price cuts since November. The appeal of this trend extends beyond mere affordability; it translates into an expanded array of options for potential homebuyers.
Fall’s Promise for Determined Buyers
“For determined buyers, with a budget robust enough to absorb the recent surge in mortgage rates, this fall presents an increasingly attractive opportunity. More motivated sellers and a higher volume of active listings than at any time since last December enhance the likelihood of finding the perfect fit,” noted Tucker in the report.
The housing market in the United States has encountered some challenges, marked by a slowdown in home sales, primarily caused by the dwindling affordability of homes. This decline in affordability is a consequence of surging prices, exacerbated by a scarcity of inventory and soaring mortgage rates. The average 30-year fixed mortgage rate reached a 23-year peak of 7.31%, according to the most recent data from Freddie Mac.
Tucker further explained, “The abundance of price reductions this fall could be attributed to buyers retreating from the market, sellers setting excessively high list prices, or a combination of both factors.”
Interestingly, the surge in price reductions on listings coincides with a rise in new listings in August compared to July—a development that Tucker characterizes as “unusual.” Considering that the number of listings had been decreasing since July of the previous year, the uptick in August suggests that the worst of the “listings drought” might be subsiding.
A Closer Look at Inventory and Mortgage Pressures
When considered together, the substantial increase in home listings in August, coupled with a weakening demand from homebuyers, implies that more inventory is becoming available for potential buyers. However, prospective buyers are currently facing financial pressures due to the surge in mortgage payments.
Higher home prices have driven the typical monthly mortgage payment up to $1,896 in August, marking an 18% increase compared to the previous year, according to Zillow’s data. In total, the monthly mortgage payment, including both principal and interest, has surged by an astonishing 122% over the past three years.
Zillow’s recent report also highlights a significant surge in the value of the US housing market, which has climbed approximately 50% from pre-pandemic levels in January 2020 to nearly $52 trillion at present.
At Quintessential Mortgage Group we are actively conducting thorough research, considering the numbers, and evaluating potential costs and savings whether it might be for purchasing or refinancing. We’ll be there with you every step of the way.
Contact us for more information!
