Positive Trends For Homebuyers
It is no secret that the real estate market has experienced a dramatic shift in 2022. The biggest shift has provided many positive trends for homebuyers. This is largely due to the fact that we have seen a historically quick rise in mortgage rates. The reason for the rise in mortgage rates is that the Federal Reserve is trying desperately to fight off decades-high inflation. This trend is unlikely to reverse anytime soon, as inflation continues to come in higher than expectations. As the market has cooled, we have seen some positive trends for homebuyers. As the pandemic frenzy continues to subside, we will likely continue to see more positive trends for homebuyers. Here are a few of these positive trends for homebuyers that will likely lead to a more enjoyable homeownership journey than in the past.
More Homes On The Market
One of the key definers of the pandemic housing market was the supply of homes for sale. The supply of homes for sale in Louisville, Kentucky, as well as the entire U.S., hit record lows. This record low demand caused multiple issues downstream. Higher home prices, record amount of over-list offers, waived contingencies, and more, are all attributed to the supply of homes.
These combinations made buying a home for homebuyers very difficult. However, in 2022, we have started to see some positive trends for homebuyers. According to Calculated Risk, the supply of homes for sale has increased by close to 40% in 2022, from the year earlier. This is a step in the right direction, but homes on market are still historically lower than trend. Even though this is still a seller’s market, we have seen a dynamic shift in terms of more options, less multiple offers, and easier home searches.
More Positive Trends For Homebuyers
One of the most talked about issues during the pandemic home buying frenzy was the fact every home had multiple offers. This is the first time ever that the average number of offers on a home reached those levels. As the supply of homes, mentioned in the paragraphs above, continued to sink, the desperation of buyers started showing. Bidding wars, over list offers, and waiving contingencies are looking like a thing of the past. According to the National Association of Realtors (NAR), the average number of homes that have sold recently has declined.
The average number of homes sold has declined for multiple reasons, including: people already moved, higher mortgage rates, higher prices, etc. This September, we saw an average of 2.5 offers per home, down from 3.7 the year prior. For those who tried buying a home over the past two years, you probably experienced a multiple offer bidding war. This trend, which was not one of the positive trends for homebuyers, seems to have ended. Now, this trend seems to be positive for homebuyers.
Negotiations Are Back
Finally, as we see less competition for homes in the market, buyers gain more leverage. The leverage, in this instance, comes in forms of negotiations. Buyers now are able to negotiate contract terms, unlike the last two years. Repair requests, concessions, and more, are now becoming more common as the market becomes more neutral in 2022. Also, waiving of contingencies finally seems to be stopping, allowing for buyers to have more control over their home buying process.
According to NAR, the number of contracts waiving contingencies has continued to drop throughout the year. This is a positive trend for homebuyers, and will likely lead to a neutral housing market in 2023. A recent survey from realtor.com confirms that more sellers have been accepting contracts with contingencies. According to the report, 95% of sellers reported buyer contracts with inspection contingencies. Of these 95%, 67% asked for repairs. This is considerably different from years past, and continues to be a positive trend for homebuyers.