By Mike Bodeen · 16 September 2024
Hello Buyers? Where are You?
From Mortgage Bankers to New Home Builders to Title Companies, to livelihood threatened real estate agents, and many others, the same question is being asked industry-wide: When will buyers jump back into the market?
Mortgage rates have continued to drop and are at their lowest point since spring of 2023. The 30-year fixed rate conforming loan is 6.14%. FHA and VA rates are in the 5.7% range already, but still, no bull-rush towards loan applications.
This begs the question, “what’s it gonna take?
But first, before we get into that, here are the latest numbers for August:
Active Listings: 18,430 vs 11,969 last year – up 54% – and up 5.5% from 17,474 last month
Under Contract Listings: 6,658 vs 7,111 last year – down 6.4% – and down 8.6% from 7,287 last month
Monthly Sales: 5,683 vs 6,267 last year – down 9.3% – and down 8.5% from 6,208 last month
Monthly Average Sales Price per Sq. Ft (PSF): $291 vs $282 last year – up 3.0% – and up 1.3% from $287 last month
Monthly Median Sales Price: $440,000 vs $435,000 last year – up 1.1% – but unchanged from $440,000 last month
There were 1,453 closed new homes in Maricopa County, down 9.6% from 1,608 in August 2023 but up 6.4% from July.
The new home median sales price in Maricopa County was $513,633, up 2.7% from August 2023 and up 1.5% from July.
Current Rental Monthly PSF $1.38 down from $1.40 in August
January to September 2024 Rental PSF on a moving average: $135.
In the proverbial nutshell:
· Listings continue to increase
· Listings under contract are decreasing
· Sales are down; Pricing is Flat
· Rents Remain Stable
So Mike, what’s it gonna take for a much needed buyer surge to happen? Spoiler alert. No one knows.
In almost a year and a half we’ve seen rates drop from 7.8% to the current 6.14%. Sales continue to drop. Next week might bring another drop when the Fed lowers it’s Fed Funds rate. But some “experts” feel that rates have already lowered based on the Fed ‘s signaling their lowering next week.
Presidential politics has one party giving lots of money to home buyers. Even if that were to happen, that’s well into next year. Are buyers waiting for that? The other party says that solving the immigration problem will be great for buyers. Even if that were going to happen, that sounds like a long drawn-out process. Not much hope and change expected anytime soon for these candidates.
As we’ve discussed before too, even though rates are dropping, prices have yet to budge downward enough that helps their affordability. I think the silver bullet is a combination of both lower prices and lower rates.
Some buyers are getting really good price reductions now, and that will continue for the near term. Good negotiation is the tool we use to achieve lower pricing.
There will come a point when the flood gates open, and historically, it seems to happen all at once rather than a drip here and a drip there. Will it happen when rates drop into the 5% range? One would think so, but so far, even though FHA, VA and 15 year rates are already there, those rates have not yet brought buyers out in large numbers.
We’ll shortly see.