Monthly Market Metrics | 10.2023
10/06/2023
Thank you for tuning in to Tungol Mandap’s Monthly Report on rates and economic activity affecting your real estate market today. The Monthly Market Metrics is a new series that will explore the things happening around us that affect the economics of buying a home. Often, people miss opportunities in the real estate market because they are looking at the wrong aspect or they don’t see how valuable a compromise can be. Hopefully, this report will help you make some informed decisions about home-buying at the right time. Our contributing lending expert, Mark Thatcher of Fairway Independent Mortgage Corp., will break things down in ways that are easy to understand and hard to forget, so you will have a toolkit of knowledge to interpret things you hear about the real estate market.
This week I started to hear from real estate agents something that I hadn’t heard all year: their listings have been on the market for 2-3 weeks, and they have needed to come up with a new strategy to sell their homes. This was quite the contrast to what I experienced with my own borrowers just this past month, where we had to really put forth our A-game in order to win the contract. It is left to wonder if this means October 2023 will be similar to October 2022, where I helped some happy homebuyers offer less than the list price on top of asking for some seller credit to pay closing costs. I recall how nervous people were to buy last year because they felt rates were too high and the home was priced too high as well. One year later, I can confirm that their interest rate is well below the national average, and comparable homes have recently sold for 5–7% more than what they paid.
Market headlines state that inflation progressed lower, pending home sales fell about 7% in August, and interest rates have risen. (See here: https://www.nar.realtor/research-and-statistics/housing-statistics/pending-home-sales). The Pending Home Sales Index helps us understand how many real estate transactions occur each month, so it is a good indicator of what will happen to existing home sales.
Today, payroll data revealed that the September US jobs report was better than expected, although the newly created jobs were predominately part-time jobs or jobs of people who had multiple jobs. Full-time employment actually decreased. This economic data meant that employers were still looking for new employees, which would apply upward pressure on wages. An increase in wages could mean that the Fed will keep the Fed Funds Rate up to cool inflation. This chain reaction will likely keep interest rates where they are. So what does this mean?
One year ago, the reluctance to purchase a home created an opportunity for buyers to get a deal on their purchase. Let’s do a quick analysis of the situation and what could happen in the future for a moment. When you buy a home, there is the purchase price and the interest rate. One of those elements is changeable, while the other is not. How lucky are we that the one we will not have the opportunity to change is the one where buyers might be able to negotiate down this month: the purchase price? If interest rates go down in the future, hopefully we will be ready to refinance. If they go up, well, then it’s a good thing we locked and bought now!
Mark Thatcher, NMLS #1883412
Tel: 202-394-8469
Email: mark.thatcher@fairwaymc.com
In Search for Your Home? Apply Today: Click Here