Written By Annemarie Rogers - Loan Officer in Plymouth
The spring of 2022 saw an unprecedented spike in home prices. Despite the historic rise, new homes hitting the market went pending sale within 24-48 hours. Sellers were flooded with offers well above-asking while buyers waived inspections and offered huge concessions in an attempt to differentiate themselves from the crowded field.
Current Market
As we enter the fourth quarter of 2022, the overheated housing market appears to be cooling down. The sellers’ market of spring 2022 appears to be giving way to a market that offers a competitive advantage for buyers.
Marsha Zeller, a realtor with Adlhoch & Associates, shares her assessment of the current conditions for buyers.
“With what we’re seeing right now, there is not as much competition with making offers,” Zeller said.
Buyers who had given up finding a home earlier this year, may want to consider re-entering the housing search, given the more favorable conditions.
According to Gino Tozzi, PhD, associate broker for Real Estate One, the market today is far better for buyers.
“The good thing for buyers is they don’t have to compete against so many offers today,” Tozzi said. “It’s also easier for buyers with lower down payments to get offers accepted.”
Tozzi is happy buyers don’t feel pressured to waive inspections when purchasing a home, as inspections are a key tool for buyers to feel comfortable with the condition of a home and allow buyers to make informed decisions when purchasing a home.
“I never suggest doing that,” Tozzi said in regards to waiving an inspection as part of an offer to purchase.
Buying and Selling in the Current Market
As the market gives way to more favorable conditions for homebuyers, caused in-part by interest rate hikes, determining a good time to buy can still be confusing.
“Today’s interest rates can be daunting, but it’s still a great time to invest in real estate,” Tozzi said, citing the long-term affordability factor. “While rents rise, home payments remain steady.”
Zeller agrees that the market is still a good opportunity for buyers. “It’s still worthwhile to buy a home now,” she said.
She believes it is a much better market when buyers don’t have to rush into making an offer and can view a home more than once. “The best buyer is an educated buyer,” Zeller said. “Buyers can make more informed decisions today and that equates to better long-term outcomes.”
While buyers have benefited from having more time to make a decision, sellers should not be discouraged by the shift in today’s market, according to Zeller.
“Sellers don’t have to worry that a home will sell, it’s just a matter of when,” she said. “A house priced right should still sell in the first two weeks. The agents and sellers that are best able to adjust to the market are going to be the most successful.”
Contingent Buyers
According to Zeller “non-contingent offers are still the strongest offers.” For buyers whose offer is contingent on selling their current home, Zeller says “using a bridge loan can be a good option for buyers that want to make a non-contingent offer. It creates more buying power.”
Bridge loans are short term loans that allow a buyer to withdraw equity from their current home prior to it selling. Buyers would need to qualify for a purchase with their existing housing payment, taxes and insurance on the home, the bridge loan and the housing payment for the home they are purchasing. Michigan First Credit Union offers bridge loans to its qualified members.
Zeller cautions sellers to weigh all options when electing to buy a new home before the sale of their existing home. “There may be carrying costs for their current home for a short period,” Zeller said.
For more conversations with industry experts and insights into the current market check out our Virtual Homebuying Series or contact our Mortgage Team to discuss any questions about bridge loans, interest rates, or other homebuying questions.