People were flocking to buy a house when it was possibly one of the most difficult times in history to do so. Sure, interest rates were super low, but that’s about the only thing buyers had in their favor.
Competition was fierce, since there were so many buyers and not enough houses to satisfy demand, making it almost impossible to get your offer accepted. Prices were going higher and higher. And if you even wanted your offer to get a second glance, you pretty much had to give up your rights to typical inspections. Forget about asking for any concessions from a seller! Yet buyers were still lining up (literally) to buy houses.
Then mortgage rates went up, and many buyers felt like it was an awful time to buy a house. Consumer confidence plummeted to a low of 16% back in October and November of 2022. But, according to this CNBC article, as prices are starting to come down in some areas, consumer confidence is rising and is now up to 21%.
A five percent bump might not seem all that great, but if you’ve been thinking about buying, that could be the sign you’ve been waiting to see in the market.
Not only are lower prices a good reason to buy now, according to this Real Deal article, sellers gave buyers concessions in 41.9 percent of home purchases in the fourth quarter. Just months ago, buyers were regularly waiving their rights to even get an inspection done on the house, let alone hoping to have a seller take care of any repairs. Now, many buyers are getting money toward repairs, closing costs, and even mortgage-rate buy-downs.
Let’s break it down with some bullet points to paint a clear picture of all the combined advantages to buying a house right now:
- Prices are coming down. Prices aren’t necessarily dropping as far down as some buyers might like to see—or in every area—but there is data showing that prices are coming down.
- There’s less competition. While consumer confidence is up, many buyers are still either priced out of the market by higher rates, or just don’t feel like it’s a good time to buy a house.
- Houses are taking longer to sell. You have more time to look at houses and choose one. Mere months ago you almost had to write an offer sight unseen, within hours of a house being listed. It’s less hectic and stressful now.
- Sellers are more likely to negotiate. Combining what sellers are seeing in the news about the market shifting, and then seeing fewer buyers than they may have anticipated coming to see their house, along with it not selling as quickly as they thought it would, sellers are more likely to negotiate.
- Sellers are willing to negotiate on more than just price. As noted above, sellers are not just negotiating on price, they’re also willing to give concessions to buyers in the form of repairs, closing costs, and mortgage-rate buy-downs.
- As consumer confidence rises, so will competition. This is a sweet spot of sorts right now. There are indications that consumer confidence is on the rise, but it’s still low, so there isn’t a significant increase in competition. But as the confidence spreads, more buyers will re-enter the buying pool, increasing your competition. More buyers re-entering the market could also impact how much sellers are willing to (or even need to) bend on price, terms, or concessions.
The Takeaway:
If you’ve been thinking about buying a house, paused your home search, or given up altogether because of the rise in mortgage rates, you might want to consider buying sooner than later.
While rates are certainly higher than the all-time lows they were at just a year ago, many other factors are more favorable for buyers now than they have been in quite some time. There’s less competition from other buyers, sellers are willing to negotiate on price, you don’t have to waive inspections as often, and you stand a good chance at having a seller offer you money for repairs, closing costs, and/or a mortgage-rate buy-down.
About Tom
Realtor-Tom Gilliam is your expert to buy or sell your home in Oakland County, Michigan, the Oakland County community’s number one Realtor. In Oakland County, Michigan, you need to find a Realtor who knows the community.
Tom Gilliam currently lives in the Oakland County Area and is very familiar with the market, neighborhoods, schools and community issues. His office is located into the heart of Farmington Hills, with five additional offices throughout the south east metropolitan area to serve his clients real estate needs.