If you need assistance, please call 757-589-7628

What’s ‘in’ and What’s ‘out’ this Spring Home-Buying Season

Monday, March 11, 2024   /   by Todd Morton

What’s ‘in’ and What’s ‘out’ this Spring Home-Buying Season

First-time home buyer Brett Feldman began looking for a home four months ago, eager to own his own property. Mortgage rates were high, and home prices were rising, but the Atlanta native wanted to start building equity on his first home.

The market has turned out to be unusually hot. “It’s difficult to find a house,” Feldman, a 25-year-old real-estate entrepreneur who is looking to buy a $2 million single-family home, told MarketWatch in an interview. 

When a listing pops up and Feldman and his real-estate agent request to view it, they are sometimes told that there are six or seven offers already on the table, he said.

“It goes very quickly. It has shocked me completely,” Feldman added. “I wasn’t expecting it when I started the process.”

Spring home-buying season beckons

Feldman’s experience is one that many other house hunters may already be experiencing, or are about to experience, in the coming months. 

The spring home-buying season will soon be upon us. And with that, the real-estate industry kicks off what it hopes will be a flurry of home sales. The season is typically considered to be a busy period in the real-estate world, as homeowners and buyers sell and purchase homes ahead of the start of the school year.

But the current market is anything but typical. Though mortgage rates are over 7%, which in theory strains housing affordability and dampens buying demand, the fact that the supply of homes on the market is so constrained is warping the dynamics of the market.

Buyers are contending with a limited level of inventory. And pent-up demand over the last two years —  since the Federal Reserve started hiking  interest rates and pushed up mortgage rates —  is outpacing supply. 

“No end in sight to rising house prices,” Thomas Ryan, a property economist at Capital Economics, titled a recent note. 

In January, resale home prices rose 5.1% from the previous year. The median price of a home was $379,100, which was an all-time high for the month of January.

“Even if mortgage rates fall to 6% as we expect, mortgage rate ‘lock-in’ will continue to curb home moves. As a result, we only anticipate a trickle of new resale supply coming onto the market over the next few years,” he added. 

And “that will keep a lid on any recovery in activity, even as lower mortgage borrowing costs draw some buyers off the sidelines,” Ryan wrote.

New listings rise sharply in February

But a thawing may be at play in some local markets. New listings rose in February, which some real-estate economists consider to be an early sign of a pick-up in sales.

Realtor.com said that the number of new listings on the market in February was up 11.3% as compared to last year. Redfin said listings were up 14%, which was the biggest increase in nearly three years. Zillow estimated that new listings were up nearly 21% in February, as compared to last year.

Realtor.com is operated by Move Inc., a News Corp subsidiary. MarketWatch publisher Dow Jones is also owned by News Corp NWSA, 0.78%.

“We’re starting to see a modest rebound,” Orphe Divounguy, a senior economist with Zillow, told MarketWatch, “which bodes well for the housing market this spring.”  

An early look at Zillow’s February data provided to MarketWatch indicated that homes went from being listed to going under contract in 17 days on average, which is “really, really fast,” Divounguy said. Before the pandemic, that figure was about 27 days.

The typical home in the U.S. was valued at $349,216 in February, the company’s data showed, which means the typical mortgage payment for a buyer who will put 20% down is about $1,800 a month. 

The metros where new listings were up the most were Seattle, Minneapolis, and Austin, Texas, where the figure was up 51% in February, as compared with the previous month. 

To be sure, the rise in listing activity doesn’t equate to a flood of listings that will reduce the pressure of low supply. “Inventory is still 36% below where it was before the pandemic,” Divounguy said. 

“So we really have a long way to go,” he added, until we reach a more balanced market.

Mortgage rates also remain a challenge for buyers, as they stay over 7%. “Right now, rates are hyper-sensitive to any kind of news or data that’s given,” Phil Crescenzo, division manager at Nation One Mortgage, told MarketWatch. 

At the same time, Crescenzo said that over the course of February, his branch saw a 10% increase in purchase loans, with most being Federal Housing Administration loans and Veterans Affairs loans. About half were first-time home buyers.

“When there’s news, the market’s starving for it, and it’s causing whiplash,” he added, and that’s impacting the rates that lenders are able to quote borrowers.

What’s in and what’s out for home buyers in 2024 

With that in mind, here’s what home buyers should expect as  the new reality this spring home-buying season, and here’s what’s in and what’s out, according to MarketWatch’s conversations with real-estate agents, economists, and buyers. 

What’s in: 7% rates

In San Diego, Jason Cassity, a real-estate agent with REAL Broker, told MarketWatch that even though rates are still elevated as compared to the pandemic era, people were moving on.

“We’re doing twice the business at this point as we were last year,” Cassity said, as “buyers are realizing that rates might not ever come back down to 3% or 4%. So there’s a new normal settling in.” 

But for a homeowner like himself, who has a 2.9% rate on his home that he bought in 2021, moving to a bigger home or a better school district is not an option at this point due to how much more expensive the market has become. “We couldn’t even afford the house that we have now,” Cassity said.

What’s in: Buying a home in your 20’s

Some young aspiring homeowners are seizing the moment to build home equity and are well-prepared to pay for big-ticket properties.

Feldman, who owns a commercial real-estate property management company, is keenly aware of how many of his 20-something peers aren’t in a position to buy a $2 million home. 

About one-third (31%) of Gen Z members say they live at home with a parent or family member, according to a recent survey by Intuit Credit Karma. Among those in Gen Z who rent, 41% say they’ve had to sacrifice buying essentials to cover their rent, the survey found.

Feldman is eager to start building equity. The 25-year-old has been looking at homes with Mike Toltzis, an Atlanta-based broker at SET Real Estate Group at Compass, specifically in Sandy Springs and Brookhaven, which are Atlanta suburbs where he would be close to family. 

If he ends up buying a home, he would be part of a minority. About 26% of adult Gen Zers owned a home in 2023, which was unchanged from the previous year, according to analysis by real-estate brokerage Redfin. But most Gen Zers are tracking ahead of where their parents were at the same age, the company noted.

They’re also poised to be the biggest beneficiaries of a so-called silver tsunami of homes hitting the market, after baby boomers age out.

Even with a relatively high budget of $2 million, “that price point is challenging in the metro Atlanta area, and specifically the neighborhoods he’s targeting and looking to live,” Toltzis said, due to limited inventory and a so-called lock-in effect as homeowners feel little incentive to give up their rock-bottom mortgage rates.  

Roughly 9 in 10 homeowners have a 30-year mortgage with a rate of less than 6%. 60% have a rate below 4%. The current 30-year mortgage rate was 6.88  as of March 7, according to Freddie Mac.

Sean Balsiger, a 29-year-old homeowner who grew up in Oregon, is looking to move to Jupiter, a town in Palm Beach County, Fla., for a job opportunity, but is finding it hard to buy a home within his budget of $1 million.

The repeat buyer and his wife have been looking for a two or three bedroom single-family home for the last two months. 

But they haven’t been able to find anything they like in their price range. “The area that we want to move to, there’s just really nothing under a million dollars. And that’s making it really difficult to figure out whether or not relocation makes sense for us,” Balsiger said. 

The couple is able to try to buy a second home while still in their 20s thanks to help from their parents, Balsiger said, who helped the couple buy their first home in Oregon. 

What’s in: Longer commutes 

As the number of home listings in desirable neighborhoods continue to be lower than before the pandemic, house hunters are adjusting to the possibility of a longer commute.

Repeat buyer Mike French and his wife have been looking to buy a four-bedroom single-family home, or a 3-bedroom property with a study, for up to $550,000 since January. They’ve been renting for 12 years. 

The Orlando-based couple, who had previously owned three homes out of state, were looking for something more permanent after their longtime landlord said they were going to move back into the home. 

With their youngest child entering their senior year of high school in the fall, the couple wants to buy a home a little further away from the school district they were renting in. 

Buyers are still open to moving further away from their current location. The median distance between the home that buyers recently purchased and the home they moved from was 20 miles in 2023, according to a report from the National Association of Realtors. That was down from 50 miles the previous year, but up from the previous median of 15 miles. 

But distance to the office has become a priority for home buyers, based on a 2023 analysis by Realtor.com. Many buyers are looking for options close enough to where they work.

“I’m fortunate to be able to work remotely, and when I can, go down to our offices,” French, who works in the aviation industry, said. But the commute adds up: it costs him $10 in gas, $10 in tolls, and is 45 minutes each way.  “I don’t go in every day, let’s just put it that way,” French said.

In Palm Beach, Sean Balsiger was also weighing options outside of his preferred area. There are homes 45 minutes away from where he was hoping to buy that could work for him and his wife, Balsiger said, but “I don’t know if it makes sense for us to have that much of a commute.” 

With Mike McKee, an Orlando-based real-estate agent with Compass Florida, French has attended between 10 and 12 open houses, but hasn’t found anything yet that was worth submitting an offer for. 

McKee said out of the nearly three decades he’s been in the business, he’s mostly worked with an even split between buyers and sellers. While volume has been higher this year as compared to 2023, two-thirds of his business is from home buyers. “That just shows you the imbalance,” he added. “There are just way too many buyers.”

For his part, French is willing to test his patience. “We haven’t found Goldilocks yet. It’s either too big, or too small, or not the right neighborhood, or needs work,” he said.  

The home needs to be big enough to hold a family of two parents and three kids, but not so big that “my wife and I feel like we’re lost in it when we’re empty nesting,” French said. 

Not to mention that the family needs a big enough driveway to park the four cars they own. “We will need the ability to park four cars in some way, shape, or form, so we need to make sure we get enough driveway space,” he added. “We play musical cars a lot.” 

What’s in: Bidding wars (sorry)

As inventory remains lower than normal, or at least lower than it was before the pandemic disrupted the real-estate market, be prepared for multiple offers chasing one home, agents said.

In Palm Beach, Nicole Stanbra, a real-estate agent with REAL Broker, said that homes under $600,000 are flying off the shelves.

At that price range, “we’re still seeing multiple offers, and it is still very competitive,” Stanbra said. “If it’s a great home and it goes to the market, it can be gone that weekend.” 

Balsiger, her buyer, submitted one offer on the first trip he made to Palm Beach to look at homes. He was outbid by a cash buyer. Balsiger said he would consider renting while continuing to search for homes, given how tough the market is for buyers with his budget and preferred choice of neighborhood.

Toltzis, the Atlanta broker, said that if a good home hits the market for under $1 million in the right neighborhood, it’s gone within 72 hours. 

Bidding wars are also back in Cassity’s  neck of the woods in San Diego. “We’re gonna have a year that mirrors 2021, which was, give up your firstborn to get a single-family home,” he said. 

What’s in: Finding homes off the market 

One of the strategies that has been paying off for Cassity, the San Diego real-estate agent,  is to target homes that are off the market, as in homes that haven’t even been listed yet. He’s been using this tactic to find homes for some of his home buyer clients. 

Some real-estate agents and companies find these homes by targeting neighborhoods or homeowners who might have a higher propensity to sell, such as older homeowners who may be empty nesters looking to downsize. Agents will reach out to these homeowners through mailers, calls, texts, or even through targeted social media advertising, to build a relationship. When the homeowner decides to sell, they can turn to that agent, who can give their clients an early look before the house is widely listed. That way, “we don’t have to get into that competitive situation,” Cassity said. 

In Palm Beach, about 20% of Stanbra’s  business in 2023 was off market, she said.

What’s out: Waiting for rates to fall

Buyers on the market today must swallow any hesitations they have with 7% mortgage rates. And they’re showing some signs of doing so, as seen in the recent mortgage application data, where the share of Federal Housing Administration loans ticked up, which means that first-time home buyers were actively looking for homes.

With significant pent-up demand for homes, one economist has a word of advice for buyers: “If you hold out for a lower mortgage rate, know that home prices are going to keep going up in most markets,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. 

What’s out: Lock-in effect

While it is still too early to tell if the lock-in effect is fading, the increase in home listings in February is an optimistic sign, agents said. 

Consider Balsiger’s case: Back in Oregon, his home has a 30-year mortgage rate of 3%. Buying a home in Palm Beach would hence be a stretch. “It’s going to be nearly double what we’re currently paying for the mortgage,” he said. 

But that doesn’t mean buying a new place was off the table. Buying a million-dollar home with a 30-year mortgage rate of 7% would mean that “we absolutely love it,” Balsiger said. 

For sellers who are in a similar position, there is some comfort in knowing that the market is in their favor. “It’s still a seller’s market,” Cassity, the San Diego broker, said. In his market, sellers aren’t making as many concessions to try to lure buyers as they were a year ago, and it’s just as competitive as it was in 2021.

What’s out: Sticker shock    

Buyers in this market are a lot more financially prepared for a fight than they were before, Cassity said.

After going through the ringer with multiple offers that were rejected by sellers over six months, one of his buyers offered to put down half of a home’s sale price, rolling over the proceeds from the sale of a previous home. “So even though the interest rate was high, the payment wasn’t too bad, because he’s putting down so much,” Cassity said.

Buyers are also adjusting their expectations about prices. Buying a million-dollar home “a couple years ago was a hard pill to swallow, but now it’s the norm,” Stanbra noted. 

The share of homes in the U.S. that are worth more than $1 million  dollars grew from 9.3% of active listings in 2018 to 15.6% of for-sale inventory in 2023, according to data from Realtor.com provided to MarketWatch.

What’s out: Dreaming of a housing crash 

And what’s definitely off the table in 2024 is a housing crash, experts said.

Despite home foreclosure activity  rising in January, it’s not at a worrying level just yet, First American’s Mark Fleming previously told MarketWatch.

Even though some homeowners cannot  make  their mortgage payments, it’s not at a level where people are losing their home, he added. 

Delinquency rates are expected to  remain low for the time being, according to a report by right-leaning think tank American Enterprise Institute. That’s partly due to a new loss mitigation option introduced by the Federal Housing Administration.

“However, these policies may have unintended consequences, including postponing losses to a future date, by which time they might have grown substantially,” they added. 

And don’t expect home prices to ease up either, one economist advised.

“Despite numerous speculations of significant home price declines in light of higher mortgage rates and significant affordability challenges, home prices continue to grow and recorded an overall 4% increase in 2023,” Selma Hepp, chief economist at CoreLogic, told MarketWatch.

“The lack of existing homes for sale has provided a floor under home prices which have not fallen as a result in most markets,” she added. 

And with mortgage rates expected to fall, like Sturtevant, Hepp also believes that more buyers — and increased competition — will prevent home prices from falling.

CoreLogic is forecasting that home prices will grow 3% in 2024, with some markets seeing double that rate of growth.

Source: https://www.marketwatch.com/story/whats-in-and-whats-out-this-spring-home-buying-season-spoiler-alert-7-mortgage-rates-are-still-here-df5cfd26#_=_ 

  first-time home buyer, home buying, housing market, virginia beach

AtCoastal Realty - The Morton Group
Todd Morton
582 Lynnhaven Pkwy STE 400
Virginia Beach, VA 23452
download (5).png
Shannon Hodges
600 Lynnhaven Parkway Suite 100
Virginia Beach VA 23452

©2024 REIN, Inc. Information Deemed Reliable But Not Guaranteed. The listings data displayed on this medium comes in part from the Real Estate Information Network, Inc, (REIN) and has authorized by participating listing Broker Members of REIN for display. REIN's listings are based upon data submitted by its Broker Members, and REIN therefore makes no representation or warranty regarding the accuracy of the data. All users of REIN's listings database should confirm the accuracy of the listing information directly with the listing agent.

©2024 REIN. REIN's listings data and information is protected under federal copyright laws. Federal law prohibits, among other acts, the unauthorized copyright or alteration of. or preparation of derivative works from, all or any part of copyrighted materials, including certain compilations of data and information. COPYRIGHT VIOLATORS MAY BE SUBJECT TO SEVERE FINES AND PENALTIES UNDER FEDERAL LAW.

REIN update its listing on a daily basis. data last updated: April 18, 2024

Some listings may be duplicated in the search results due to the co-mingling of listings from more than one multiple listing service. Should there be different listing information between the duplicated listings, user is advised to verify the accuracy of the listing information before making any financial decisions.

Some or all of the listings (or listings data) represented in this application have been enhanced with data not provided by REIN. The enhancements are as follows: Property Description, Property Photos. The source of these enhancements are: Google, Zillow, Trulia, etc.

This website does not include information on all the properties available for sale at this time.
This site powered by CINC: www.cincpro.com