Archive for category: Blog

By Kimberly Dawn Neumann

Aug 28, 2023

Real estate has always been a high-stakes game, with lots of money and hope hanging in the balance. And amid the current landscape of high interest rates, pricey listings, and a shaky economy, it’s no wonder many homebuyers are worried they might make a wrong move that could cost them dearly.

Real estate agents say homebuying anxiety has risen to a fever pitch among many of their clients—and for good reason, since today’s market is filled with new challenges and land mines that can be tough to spot.

“Real estate was not designed to move at the pace that it has for the past year,” says Eminlee Wang, a real estate agent with FlyHomes in Dallas. “I’m spending far more time than I was during the [COVID-19] pandemic educating and grounding clients on what’s happening with rates, prices, and inventory in order to calibrate expectations.”

In such a murky real estate market, it’s understandable that emotions can run amok—and might push homebuyers to make some rash decisions that they think/hope/pray might give them an edge, which, in fact, might plunge them in over their heads.

To help, we’ve highlighted some of the most common mistakes homebuyers are making these days, so you know where these pitfalls are hiding and can steer clear.

1. Trying to time the market

With real estate, as with stocks, trying to time the market is generally a losing proposition. While it might be tempting to try to wait it out and hold off for the perfect moment to buy, the reality is that conditions will never be perfect.

“The biggest mistake buyers make is not moving forward now in the hope that rates or prices will come down,” says Mason Whitehead, a Dallas-based branch manager for Churchill Mortgage. “At least in Texas, one of the states with the highest demand nationwide, that is just not happening.”

As a result, Whitehead suggests that homebuyers ask themselves “what if” questions to help in their decision-making:

• What if you buy now and prices and rates go up? You win by starting to build home equity and gaining the tax benefits that come with homeownership.
• What if you buy now and prices drop? You won’t really feel that until you sell, which in most cases might be years down the line. So, you haven’t really lost it yet.
• What if you buy now and interest rates go down? You can always refinance your mortgage when rates get low enough that it makes sense to do so.
• What if you don’t buy now and prices and rates keep going up? If that’s the case, you might be stuck renting for a lot longer than you hope.

Whitehead says that waiting is unlikely to change the fundamentals of the underlying and long-term factors of the market.

“Over time, real estate is still one of the main wealth-building drivers for Americans, so it’s an investment that is more than likely going to benefit you and your family in the long run,” says Whitehead. “Instead of continuing to pay rent and help someone else gain equity, take the opportunity to start earning it for yourself.”

2. Worrying only about your mortgage payments

With mortgage interest rates a full percentage point higher than last year, many homebuyers are sweating how much their monthly home loan bill has risen. Yet America’s mortgage obsession is leading some buyers to overlook the rest of their financial obligations.

“One of the biggest mistakes I see homebuyers making is not taking into consideration all the costs associated with getting approved for and owning a home,” says Jason Gelios, a real estate agent in Southeast Michigan and author of “Think Like a Realtor.” “Oftentimes, buyers will have an idea of their monthly payment without factoring in homeowners insurance, mortgage insurance, taxes, and any other costs associated with the home.”

Adam Littlefield, senior vice president of real estate for Investment.com, also points out that homebuyers often forget to factor in the costs of home maintenance and repairs.

“All of this can cost thousands of dollars to add on top of your mortgage payment,” warns Littlefield. “Take the time to do the research and get as detailed as possible on the full scope of what you will need to budget to realistically prepare for one of the largest investments you will make in your life.”

3. Neglecting to check your credit score

Mortgage rates are already high enough right now, but did you know that a bad credit score could make those rates go even higher?

“Having a lower credit score can lead to significantly higher interest rates [on home loans], so it’s best people start monitoring and working on improving their score as early as possible,” says Jill Gonzalez, an analyst for WalletHub.

Most experts recommend checking your credit rating a few times a year so you can get a sense of what kind of mortgage you might reasonably secure.

“Beware that some lenders may let you extend yourself beyond your means,” says Littlefield, who suggests you can save yourself stress by sticking to the 28/36 rule.

“This rule states that your total housing costs should not exceed 28% of your gross monthly income and your total debt payments should not exceed 36%. Staying within those parameters will make the homebuying process seamless,” he adds.

4. Buying a home too fast or sight unseen

Since the market has been recently moving at a rapid-fire pace, many people might think they have to make decisions in an instant or else the property will get snapped up by someone else. While this might have been somewhat true a year ago, the pace of sales has generally slowed significantly since then.

Today, in most markets, buyers can take a bit more time—and should—to ensure they’re certain they want to move ahead.

Many buyers today might feel so rushed, they might consider buying a home sight unseen. Yet many experts say this is a risky prospect that is no longer as necessary as it was during the pandemic.

“These motivated buyers will base this decision on images or digital assets online, and this is a huge mistake,” says Littlefield. “You cannot smell a house in a photo, you cannot visit a neighborhood or discuss its attributes with neighbors, and you cannot hear the outside—airplanes, trains, factories, or the pig farm a mile away.”

He suggests doing everything you can to visit and experience the home yourself before you make an offer.

5. Falling in love with a house you can’t afford

With interest rates heading higher and the market being tight, it’s become increasingly common for homebuyers to get emotionally attached to a particular listing that they just can’t afford.

Mike Hardy, a California-based managing partner at Churchill Mortgage, says his company has had an abnormal number of requests for “rescue operations” from potential homebuyers who’ve gone into escrow with other lenders that didn’t structure the loan properly. Trying to salvage a deal is more stressful than staying within budget from the start.

“I absolutely recommend someone get clear on the math before getting emotions involved,” says Hardy. “A lot of people spin their wheels getting excited and putting an agent to work, only then to discover a home was out of their budget from the get-go.”

It’s crucial for homebuyers to know what their range of affordability is, according to Gonzalez. Otherwise, any small change in the market can lead to their having unsustainable debt, or even not being able to close on the loan in the first place.

A good way to avoid this is by using a mortgage calculator, which will help people make sure homebuyers don’t go over their budget.

“Fall in love with the numbers before you fall in love with the house,” says Hardy.

6. Not securing a mortgage pre-approval

Mortgage pre-approval for homebuyers was always a smart idea, but in this ever-fluctuating market, you simply shouldn’t shop without it.

“Searching for a home without being pre-approved or underwritten causes undue stress for all parties to move forward without knowing the numbers or having certainty in purchasing power,” says Hardy.

He suggests homebuyers look for lenders who will take it even a step further and have an underwriter sign off on the loan upfront. That way, the heavy lifting on the loan is done and the homebuyer can shop for a home with the certainty and negotiating power similar to a cash buyer.

“It is crucial to be aware of what mortgage rates are doing and how that plays a part in your pre-approval,” says Gelios. “Because if rates go up, you can lose your pre-approval at the amount you were approved for.”

For example, if you are pre-approved for $250,000 and the rates drastically change, this would mean you are no longer approved for that amount, making it impossible to shop at that price range.

One option is a mortgage interest rate lock, which secures a rate, usually for 90 days. This option allows homebuyers to shop without the fear of being unable to afford the house they like because of another rate change. However, if rates dip lower, a rate lock might not serve a homebuyer as well.

Whichever route you take, just remember that getting pre-approved offers realistic boundaries of the price range in which you should be shopping.

“With the rates acting how they are in 2023, a homebuyer should be in regular touch with their lender to ensure they are still shopping for an amount that they can get financing for,” says Gelios.

7. Assuming you can’t afford a new-construction home

About 1 in 3 homes on the market today is new construction. This is going a long way toward making up for the lack of inventory. And while many homebuyers just automatically assume that a brand-new house will be beyond their means, that is just not the case today.

In fact, according to recent data from the National Association of Home Builders, nearly one-third of builders are reducing prices and more than half are providing some type of incentive, whether it’s mortgage rate locks or buy-downs.

“New-construction homes were once thought to be too pricey, but with builders offering impactful price cuts and incentives, buyers should take another look at them,” says Alex Toth, head of business development at Opendoor. “If you need to sell your existing home before you can purchase a new one, some builders also partner with companies who make it easy to do both at the same time.”

Plus, new-construction homes tend to include lots of money-saving features like energy-efficient appliances, integrated technology systems, and solar capabilities.

8. Considering only the house, not the neighborhood

Just like no human is an island, no home is without a neighborhood.

“Considering how many people work from home following the pandemic, it’s more important than ever to make sure you are comfortable in your surroundings, and there’s really no way to measure that without spending some time in the area prior to buying a home,” says Hardy.

“Being in the wrong neighborhood doesn’t necessarily mean the property will depreciate, but if it isn’t the right fit for you, that is something you want to find out before you make a purchase of this magnitude,” he adds.

Basically, you need to do your due diligence on the neighborhood and not just the house. You can look up crime rates in an area, but Littlefield advises also checking school scores and investigating if the neighborhood is family-friendly. Also, factor in the distance from the nearest grocery store or gas station.

“Discover externalities like power lines, flight paths from the nearest airport, or if there are train tracks nearby,” says Littlefield. “Be detail-oriented on these variables and how they might affect you and your family’s daily lives, because you can feel stuck and experience remorse if you love the layout of the home you bought, but the location is disappointing.”

9. Waiving inspections or thinking ‘I can totally fix that’

Waiving a property inspection was common over the past few years, as buyers were wanting to make their offers more competitive. The risks can be substantial, however, so this is not something to forgo anymore.

In fact, most real estate experts always advise potential homebuyers to get an inspection so they can understand any property challenges and related costs.

Many homebuyers also make the mistake of thinking remodel projects are easier and cheaper than they end up being.

“Budgets can balloon once you start a project, and supplies can be hard to find—especially due to supply chain shortages and issues in a post-COVID era,” says Littlefield.

Additionally, a traditional mortgage will not fund the renovations you want to make, so keep in mind you will need access to extra cash if that’s your plan.

However, passing over homes just because they don’t look pristine and need cosmetic updates might also be a mistake with the limited inventory available currently.

“Purchasing a home that needs a little TLC gives the homeowner opportunities to create exactly what they want, while adding equity into the home,” says Toth. “If the fixer-upper requires a finished basement for your growing family, you can do minimal updates, and in a few months, you’ve already doubled your living space.”

10. Failing to suss out the seller’s motivation for listing

Many homebuyers feel like they need to get a great price or a discount and “haggle” with the seller. However, if you are in a hot market or hotter neighborhood and you find the house, you might need to come in at asking price or even above, according to Littlefield.

That being said, it is a mistake not to try to find out why the seller is selling.

“I always advise homebuyers to try to learn what the seller’s motivation is when expressing interest in a property,” says Gelios. “If we are viewing a home and there are multiple boxes already packed, that tells me the seller could be more motivated to accept a lower price because it seems they already have a place to go.”

Whether it’s a buyer’s or a seller’s market, people still need to move.

“If a home has been sitting on the market for longer than expected or there is an immediate and substantial price drop, the odds are that a seller needs to make a deal ASAP—and that’s an opportunity for a buyer to submit a lower offer,” says Toth.

After all, the worst the seller can say is no.

11. Not using an experienced real estate agent

In this crazy current real estate market, experience matters. This goes for your real estate and your mortgage agent.

“Over the past two years, we’ve seen a wave of new agents, yet many quit within the first year,” says Littlefield. “As the market continues to become more competitive, especially with the lack of supply or inventory across the nation, you will want to look for a local agent who has spent at least three to five years working in the area and who has a proven track record in offer negotiations.”

Littlefield says to remember that you are allowed to interview a handful of real estate agents to be sure you are working with a professional who will help you find the “must haves,” source those homes to view, and give you great information on the neighborhoods and areas you are interested in. Look for a pro with experience in reviewing contracts, making any amendments, and guiding buyers through any contingency or inspection period.

Another benefit is the cost: Normally, the home sellers pay the full commission for both their own agent and the buyers’ agent. This means using an experienced local real estate agent costs you nothing and includes all the expertise.

It is just as important to vet your lender as well.

“It is easy for a homebuyer to be too close to their own situation to make healthy, long-term decisions, and the stakes are high with a six- to seven-figure purchase,” says Hardy. “Find a true professional who can help you think and plan for your short- and long-term future.”

Kimberly Dawn Neumann, who is based in New York City, is an author, performer, and fitness professional.

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By Sally Jones

Sep 19, 2023

When selling a home, you want to present it at its best. That first open house can be a lot like a first date. And the comparison with hoping for a love match doesn’t stop there.

So many relationship analogies perfectly capture the home buying and selling experience, from finding The One to “marrying the house, but dating the rate.” Or take “the ick”—that feeling of disgust when you first notice a big turnoff.

In the dating world, you might get the ick if a date chews with their mouth open or is rude to a server. But the ick can be just as much a deal breaker in the real estate world, stopping a potential buyer from falling for your home.

Here are the top seven things that give home shoppers an instant feeling of ickiness. Make sure none of these crops up at your open house.

1. Anything old and outdated

There’s retro cool, and then there’s retro ewww. Be sure you know what’s vintage or just plain ancient in your home.

Ryan Fitzgerald, a real estate professional with Up Homes, got the ick from a time capsule house.

“It was like a trip back to the ’70s,” he says. Homes that date to the age of Aquarius are usually an unholy mix of popcorn ceilings and avocado everything.

While time capsule houses can be fun to look at and get a lot of attention on social media, only a few people would be prepared to move into one.

“The installations were glaringly dated, making it hard to envision it without a complete overhaul,” adds Fitzgerald.

2. Quirky tastes

While outlandishly designed houses can sometimes rocket to the top of the most popular homes lists, they can be tough to sell.

Real estate professionals describe these homes as having a “particular taste” that can give some buyers the ick.

“I once toured a home that was incredibly colorful inside. All the walls and ceilings were painted different colors and patterns, and even the cabinets and interior doors were painted bright colors,” says Nathan Russo, director of operations at Destin Vacation Rentals. “I don’t mind a little color, but I just couldn’t get over how loud it was–and how much work it would take to repaint virtually everything.”

3. Cigarette stench

The stench of stale tobacco smoke is almost universally disdained—and it tops nearly everyone’s list of homebuyer icks.

“After living in a rental for a year with a heavy smoke stink no matter how much we cleaned, I was over it,” says Andy Kalmon, CEO of Benny.

The last time he went house hunting, it was one of his must-avoids.

“There was just a persistent odor I wasn’t confident I’d be able to get out of the carpets,” Kalmon adds.

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4. Carpeting in the bathroom

Many of today’s homebuyers say wall-to-wall carpeting gives them the ick.

“I recently bought a house to flip that had shag carpeting everywhere: on the floors, walls, bed pedestal, and even the sloped ceiling of the primary bedroom,” says Martin Orefice, CEO of Rent To Own Labs. “It was even in the bathroom suite!”

Carpeting in the bathroom appears to be a universal turnoff and a resounding ick factor.

5. Pets and pet odors

While we all love our pets, it doesn’t mean prospective buyers want to see signs (or smell odors) of yours at an open house.

“My wife and I just moved for work and were looking at historic homes in Naperville, IL,” says Jeff Moriarty, marketing director at Supplement Warehouse. “We found it a real turnoff if pets roamed freely in the middle of a showing.”

Oh, and don’t think you can cover up pet smells with air fresheners because that can be another pet peeve.

“We were turned off if there were a lot of candles and diffusers going,” adds Moriarty. “Our concern is what the house really smells like.”

6. Bugs and vermin

The last thing anyone wants to see when they’re touring an open house is signs of bugs or mice. So if this is a problem in a home you’re hoping to sell, have it thoroughly exterminated well in advance of showing it.

Even dead spiders or just spiderwebs can be off-putting. It was for the Moriartys.

“If we saw cobwebs or spiders in the corners of rooms,” says Moriarty, “it tells us that the home isn’t taken care of.”

7. Dolls, clowns, and religious icons

Prospective buyers report that collections of dolls and clowns give them the ick. For others, too many religious icons can be overwhelming.

The last time I went house hunting, I toured a home with crosses in every room. And the living room had a gallery wall full of them. Were neighborhood vampires an issue?

“While faith is important, it’s foundational to remember that not every buyer shares your convictions,” says Eric Bramlett, real estate professional with Bramlett Residential. “You want potential buyers to see themselves in your home, not feel like they’re intruding into someone else’s sacred space. Keep it neutral; make the space a blank slate where others can paint their own future.”

Sally Jones writes about home buying, financing, home renovation, design, and decor. Her work has been published by Realtor.com, Family Handyman, ConsumerAffairs, Reader’s Digest, Brit + Co, and MSN. See her kitchen and bath designs come to life on her blog, Renov8or.

IRVINE, Calif. — September 13, 2023 — ATTOM, a leading curator of land, property, and real estate data, today released its August 2023 U.S. Foreclosure Market Report, which shows there were a total of 33,952 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — up 7 percent from a month ago but down 2 percent from a year ago.

Nevada, Illinois, and South Carolina post highest foreclosure rates

Nationwide one in every 4,113 housing units had a foreclosure filing in August 2023. States with the highest foreclosure rates were Nevada (one in every 2,224 housing units with a foreclosure filing); Illinois (one in every 2,433 housing units); South Carolina (one in every 2,506 housing units); New Jersey (one in every 2,585 housing units); and Delaware (one in every 2,618 housing units).

Among the 223 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in August 2023 were Columbia, SC (one in every 1,471 housing units with a foreclosure filing); Fayetteville, NC (one in every 1,694 housing units); Peoria, IL (one in every 1,746 housing units); Las Vegas, NV (one in every 1,796 housing units); and Jacksonville, NC (one in every 1,848 housing units).

Those metropolitan areas with a population greater than 1 million with the worst foreclosure rates in August 2023, including Las Vegas, NV, were: Cleveland, OH (one in every 1,896 housing units); Riverside, CA (one in every 2,132 housing units); Jacksonville, FL (one in every 2,137 housing units); and Chicago, IL (one in every 2,257 housing units).

Austin, Nashville and Raleigh see greatest increases in foreclosure starts

Lenders started the foreclosure process on 22,899 U.S. properties in August 2023, up 9 percent from last month but down 4 percent from a year ago.

States that saw the greatest monthly increases and had 100 or more foreclosure starts in August 2023 included: Louisiana (up 40 percent); California (up 32 percent); Tennessee (up 32 percent); Alabama (up 30 percent); and Florida (up 28 percent).

Those major metropolitan areas with a population greater than 1 million that saw the greatest monthly increases and had 50 or more foreclosure starts in August 2023 included: Austin, TX, (up 79 percent); Nashville, TN (up 77 percent); Raleigh, NC (up 73 percent); Riverside, CA (up 68 percent); and Miami, FL (up 63 percent).

Foreclosure completions increase monthly but decline annually

Lenders repossessed 3,354 U.S. properties through completed foreclosures (REOs) in August 2023, up 1 percent from last month but down 15 percent from last year.

States that had the greatest number of REOs in August 2023, included: Illinois (324 REOs); Pennsylvania (253 REOs); Ohio (250 REOs); New York (205 REOs); and Texas (191 REOs).

Those major metropolitan statistical areas (MSAs) with a population greater than 1 million that saw the greatest number of REOs in August 2023 included: Chicago, IL (192 REOs); New York, NY (166 REOs); Philadelphia, PA (96 REOs); St. Louis, MO (76 REOs); and Detroit, MI (70 REOs).

Report methodology

The ATTOM U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the ATTOM Data Warehouse during the month and quarter. Some foreclosure filings entered into the database during the quarter may have been recorded in the previous quarter. Data is collected from more than 3,000 counties nationwide, and those counties account for more than 99 percent of the U.S. population. ATTOM’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). For the annual, midyear and quarterly reports, if more than one type of foreclosure document is received for a property during the timeframe, only the most recent filing is counted in the report. The annual, midyear, quarterly and monthly reports all check if the same type of document was filed against a property previously. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the current year, quarter or month.

About ATTOM

ATTOM provides premium property data to power products that improve transparency, innovation, efficiency and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.

 By Clare Trapasso

Sep 11, 2023

The housing market is stuck—and isn’t likely to unstick itself this fall.

Pinned down by high mortgage rates, which topped 7% last month, the market has slowed to a crawl. Buyers can’t afford to buy, sellers are reluctant to sell, and the number of available homes remains dangerously low. That shortage has led to rising home prices again, forcing many would-be buyers to put their American dream on hold.

The housing market “is weak and it’s going nowhere fast,” says Mark Zandi, chief economist at Moody’s Analytics. “I don’t think it’s going to get any better. But I don’t think it’s going to get any worse—because it can’t get any worse.”

Home sales have dropped sharply this year as there aren’t many homes available to purchase. Most sellers are also buyers, so they don’t want to give up the ultralow mortgage rates they secured during the COVID-19 pandemic to buy a new home at a much higher rate. So they’re staying put until rates come down. That’s worsening the housing inventory crisis, keeping home prices high, and leading to bidding wars and offers over the asking price as buyers compete over a limited selection of residences for sale.

Mortgage rates averaged 7.12% for 30-year, fixed-rate loans in the week ending Sept. 7, according to Freddie Mac. That’s up from 5.89% a year ago and 2.88% two years earlier.

The result? Today’s monthly mortgage payments are about 90% higher than what they were just two years ago, according to a Realtor.com® analysis.* Most of that increase is due to higher rates.

“At 7% mortgage rates, housing is just not affordable,” says Zandi.

Ironically, high mortgage rates and home prices are a result of the U.S. Federal Reserve trying to bring prices down. The Fed has been hiking its own short-term interest rates since last year in its quest to quell inflation. Generally, mortgage rates move in the same direction as the Fed’s rates. So when the Fed raises rates, mortgage rates often go up.

It’s unclear if the Fed has finished its tightening and mortgage rates can come down a bit—or if there are more increases to come.

The housing market “is going to be difficult and challenging,” says Robert Dietz, chief economist of the National Association of Home Builders, of the fall housing market. “Those who have not been priced out face limited choices.”

It’s not all bleak. There were slightly more homes that made their way onto Realtor.com in August. New-home sales have been strong. Plus, there is historically less competition for homes in the fall. Families with children in school have generally already moved, and many renters have renewed their leases.

“Fall does present this opportunity to buyers every year,” says Realtor.com® Chief Economist Danielle Hale. “I wouldn’t say inventory is back, but it’s a step in the right direction.”

Mortgage rates are expected to remain high

Many economists expect that mortgage rates will stay around 7% this fall.

“We do expect mortgage rates to come down, but pinpointing when is tough,” says Hale. “It might not happen this fall. It might be later on this year or even next year.”

The good news for buyers is once the Fed finishes its main inflation-fighting initiative, mortgage rates could dip. And if the economy falters and falls into a recession due to the rate hikes, the Fed is likely to cut the rates it raised.

That doesn’t mean homebuyers should hold their breath for lower rates. Dietz anticipates rates will fall to about 6%—by the end of next year.

For now, the Fed is expected to hold rates steady or even raise them again. Even if it does, mortgage rates aren’t expected to shoot up wildly or hit double digits.

“We’re probably near peak mortgage rates now,” says Dietz.

Home prices are rising again

Homebuyers can’t seem to win. Prices were just beginning to dip—and now they’re rising again.

They should take heart that the huge ramp-up of prices seen during the pandemic appears to be over. Most real estate experts don’t expect home prices to move up by much, and some even think they could go down a little again.

Moody’s Zandi expects to see some price declines this fall—but not by much. He expects prices to dip by a few percentage points by this time next year—nothing like what was seen during the Great Recession when prices dropped 30%.

“Homes at current prices are completely unaffordable,” says Zandi. “For sellers to start selling their homes, they’re going to have to lower their prices.”

Hale expects prices to “move largely sideways,” staying about where they are now.

Meanwhile, others anticipate some slight, single-digit price increases compared with last year.

“The price increases should be pretty moderate compared to what they’ve done over the last few years,” says Molly Boesel, principal economist at real estate data firm CoreLogic. But those high mortgage rates mean buyers’ monthly payments “will be pretty high.”

New-home construction is one bright spot in the market

New homes are becoming a larger part of the housing market since homeowners aren’t giving up their abodes. There’s so little available on the resale market, that buyers are increasingly turning toward new construction.

In July, nearly a third of all homes for sale were new construction, according to NAHB. Historically, new homes have made up only about 10% to 15% of the market.

“That really reflects how limited the amount of existing homes for sale is,” says Dietz. For homeowners, “why would you put your home on the market and lose a low mortgage rate when you can just stay put?”

The gulf between the cost of a new home and one on the resale market has also narrowed. There was only a $30,000 price difference between a new home, at a median of $436,700, and an existing one, at $406,700 in July, according to the most recent government and National Association of Realtors® data.

Plus, builders are often able to buy down mortgage rates, either permanently or as a buy-down. This can save buyers substantial amounts of money, even if the savings are only temporary.

(For example, a 3-2-1 buy-down is when the seller pays to lower a borrower’s rate for the first three years of the mortgage. If mortgage rates are currently 7%, the borrower’s rate would be 4% (3 percentage points lower) in the first year of the loan, 5% in the second year, and 6% in the third year. Then it would revert to 7% for the remainder of the mortgage.)

Who is still buying homes today?

So who’s buying in this market? Those who have to purchase a home.

“Buyers who are wading into this challenging housing market have a strong need to move now,” says Hale. “Anyone who has flexibility in when they can buy a home are probably waiting.”

Most of today’s buyers are folks who have to move due to family or professional reasons. They could be expecting a new child or having their elderly parents or grown children move in with them and need the extra space. There could be a divorce or a death that would precipitate a move. Also, remote workers who are still able to trade more expensive cities for less expensive ones are still on the hunt for homes.

“Homeowners will need to sell at some point,” says Zandi. “They don’t want to move if they can help it, but at some point, they’re not going to be able to help it.”

* The calculation compares the national median home list prices in August 2021 and August 2023 on Realtor.com. It also includes the average weekly mortgage rates from Sept. 2, 2021, compared with Aug. 31, 2023, for 30-year fixed-rate loans from Freddie Mac. Average weekly mortgage rates are from Freddie Mac. This assumes buyers put down 20% and doesn’t include property taxes, insurance costs, and homeowners association fees. 

Clare Trapasso is the executive news editor of Realtor.com where she writes and edits news and data stories. She was previously a reporter at the Associated Press, the New York Daily News, and wrote for a Financial Times publication. She also taught journalism courses at several New York City colleges. Email clare.trapasso@.realtor.com or follow @claretrap on X (formerly Twitter.)

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