The jumbo rate above is 6.1% at no points, which means you can get into the mid-to-high 5s with the buyers – or sellers – paying a point or two.
I’m going to mention it in the description of the new listing.
With the discounts already in place in some areas, and last week’s drop in the mortgage rates, this might be the best combination of discounts/declines that we will see in the next 1-2 years.
The Fed is going to keep raising their fed funds rate. Powell, Bullard and others have said that the FFR needs to be at least 1% higher, and they intend to get there next year. They don’t determine the mortgage rates, but you can imagine the impact on the bond/MBS markets.
What they won’t consider is where potential home sellers are going to draw the line.
Today, we might find sellers who are willing to consider a price that is 10% below peak, with an occasional 15% or 20% off. But you can bet that when it comes to selling for 20% to 30% below peak prices, most sellers will become highly resistant.
How many will quit instead? Or not even bother with trying to sell? Plenty.
I think the higher rates go, the lower the inventory will be.
The difficulty of finding the right house, at the right price, will keep getting harder and harder.
If you can find something close to the perfect home today, consider it strongly!
Which percentage of seller do you think list their home because they look a the market conditions and decide to sell their investment?
I’m not in the business, but I wonder what pushes a person to sell their house. For sure there are people that have the option to wait. But I’m sure that a lot of people sell because of other reason (for example move to a different place, or need to upgrade, or divorce, or a parent may die). I’m well aware that with the increase in home value in the past 2 years not many people may be forced to foreclose, so I’m not expecting much from that pool. Still, knowing what drives the majority of sellers would be interesting to understand how the inventory may evolve over the next months.
What is your opinion based on your experience?
Good question and I think the percentage is racing towards 100% of the sellers that have high motivation to sell – for a variety of reasons.
1. Rob Dawg mentioned the siblings who inherit.
2. Divorces probably have the highest motivation – they just want to get on with their life.
3. Job transfers cause a must-sell and have corporate support.
Those are the Big Three; death, divorce, and job transfer.
But then we have our client who was the original owner of the Aviara one-story. She didn’t need to sell, but she had $1.5 million in equity tied up in a house that was too big and too much to maintain. She is an avid golfer, so moving to Rancho Carlsbad was an ideal solution – they have their own golf course and she’ll be into her new home for around $600,000 after renovations.
It was a huge win to create a bidding war and get her sales price up to $2,100,000 ($300,000 over list).
But then when the buyer wimped out over the minor mold issue that we are happy to fix at our expense, we found that going back on the market during the wicked combo of perceived-deteriorating-market-conditions and Padres Fever didn’t even get us back to our list price of $1,800,000.
But will $1,750,000 cash and the certainty of closing in three weeks still be an attractive option?
I had already arranged a private-party bridge loan, but it was going to be expensive and come with $6,000/month payments – which was very uncomfortable because the uncertainty of when her home would sell was very real.
She wanted to move bad enough that the $1,750,000 deal would still get her what she wanted, when she wanted it. She was disappointed to have to settle for $350,000 less, and I was flat-out ticked off and was fine with shopping for better deals. But the seller of the home she was buying got antsy, and didn’t want to wait any longer. All the other homes for sale in Rancho Carlsbad are $100,000 to $200,000 higher now, so realistically she had one shot to make the deal.
There wasn’t any desperation involved, and she could have stayed put and been fine. But with proper guidance, she saw enough reasons to proceed. I’m not sure other agents could go into the detail that I did about the current and future market conditions, and the good & bad points of selling her house specifically.
Without a full-blown frenzy for a tailwind, there will be challenges along the way for all sellers now. They will need to have serious motivation to sell to survive them!