The Market Shifted. Here’s What It Means for You.

Here’s the short version of where the market stands this fall: things have slowed down, and buyers have more room to negotiate than they’ve had in years.

Where we are

In Northern Virginia right now we are seeing elevated inventory levels, fewer contracts being written (5 weeks in a row of declines) and as a result, we have a 3.6 month supply of homes.  We have not had this level of month’s supply since the last week of October in 2014.  The house prices have mostly held up locally even in this dynamic situation.

Why

Mostly rates. Most buyers are still looking at mortgage rates above 7%, and that’s keeping a lot of people on the sidelines.

The Fed left its rate unchanged at its meeting this week. That’s good news for now, but there’s a good chance they raise it again down the road, which could keep mortgage rates elevated. Keep an eye on inflation, jobs and now AI (there is always a new twist with the Fed). Then there are the midterm elections. We don’t have a crystal ball, so we won’t know what they mean for housing or rates until we see the results and the elected officials agenda in regards to housing.

If you’re selling

Plan on things taking longer. Homes are staying on the market longer, contracts are taking longer to negotiate, and some inspection negotiations are running 10 days or more.

Price matters more than it has in years. Homes priced right from day one still sell, sometimes with multiple offers. We have seen turnkey home priced just under the comps sell over asking. Homes that start high and chase the market down tend to sit.  Be diligent in your pricing strategy.

Expect buyers to ask for help with closing costs or a rate buydown. Seller concessions in the $15,000 to $20,000 range are common right now. Often the smartest move is a 2-1 buydown, which lowers the buyer’s payment for the first two years and can make your home stand out from the competition.

If you don’t have to sell, waiting until spring is an option. Just know there’s no guarantee spring will be better, and homes that don’t sell this fall will still be on the market competing with yours.

If you’re buying

This is the best leverage buyers have had in years. You have more homes to choose from, less competition, and sellers who are willing to talk about price, repairs and closing costs.

A few things to keep in mind:

• Ask about a 2-1 buydown. It lowers your rate for the first two years, and if rates drop and you refinance, any unused buydown money typically goes toward your loan balance. In many cases that’s a better use of seller money than paying points for a permanent rate cut that takes years to pay back.
• Spend real time with your lender. The options right now (buydowns, ARMs, jumbo programs, down payment help) are worth a full conversation, not a 20-minute call.
• Don’t go too low. Some buyers see a concession advertised and come in $30,000 to $60,000 under asking and still want money back. That usually ends the conversation. Make a strong, fair offer and negotiate from there.
• Watch for wire fraud. Scammers get busier in slow markets and around the holidays. Always verify wiring instructions by phone with your title company before you send a dime.

The bottom line

This isn’t a crash. It’s a market catching its breath after a long run. If you’re thinking about a move, or just curious what your home is worth today, give me a call. I’m always happy to talk it through.

Happy Thanksgiving – enjoy time with your family and friends!