The real estate market: small changes are happening, but don’t stare too long at them

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Published Date 11/28/2022

The subject of buying and selling homes is not a pretty one right now unless, perhaps, one can afford to pay cash for a place. Even then, however, for many buyers prices haven’t dropped enough to celebrate quite yet.

Realtor’s Andrea Riquier says this past Thanksgiving has been a cut apart from others in that if there was a homebuyer or seller at your table, you can bet your good gravy the topic must have popped up, not unlike the little piece of plastic in the middle of the turkey that tells you when it’s done. The thing is, nothing’s over quite yet despite a shift that is beginning to happen.

While mortgage rates have more than doubled throughout 2022, hitting a 20-year high by late October, over the past two weeks, there’s been an astonishing reprieve. Riquier takes a look at the latest statistics that have made the American dream of home buying such a roller-coaster ride this year, quick to point out that the overall message this Thanksgiving week is actually one to give thanks for if you’ve been waiting for a change.

“The headliner is that mortgage rates fell for the second week in a row, with the 30-year fixed-rate mortgage in the week ending Nov. 23, with the most popular mortgage product now half a percentage point lower than its recent high,” says Riquier. “So is this enough of a break to bring out more homebuyers? It was in the past, but whether this cycle will repeat remains to be seen.”

“When mortgage rates dipped this summer, it boosted buyer demand enough to stabilize cooling trends,” explains Realtor.com® Chief Economist Danielle Hale. “While that is a possibility going forward, economic uncertainty and the sense that low rates may not last long enough for shoppers to capitalize on them could mean we don’t see the same boost in demand this time around.”

Two more recent changes? First, applications for mortgages have risen in each of the past two weeks, in line with the decline in rates, according to data from the Mortgage Bankers Association. Apparently, prospective buyers are keeping their eye on the ball and pouncing at any window of opportunity. And secondly, another hopeful trend is underway: Home prices have decelerated for the sixth straight week, meaning that they rose, but at a slower pace than before. Well. Okay. At a glacial pace, but a noticeable one, with prices having been 11% higher compared with a year ago for the week ending Nov. 19, but a tad bit slower growth than the prior week’s 11.1%.

So it’s not a reason to prematurely pop the New Year’s bubbly, however, as yearly gains are likely to slow even further to single-digit, year-over-year increases by the end of the year.

Lack of supply and an overabundance of demand are ever before us. Realtor.com data, however, shows that fewer homes were listed for sale in the week ending Nov. 19 compared with a year ago. That’s the 20th straight week of yearly declines.

“On the upside, though, the bargain bin of old listings is growing,” says Riquier. “For the week ending Nov. 19, overall inventory is up 49% compared with a year ago, and these homes sat on the market seven days longer than they did a year earlier. This means buyers can take their sweet time shopping for real estate deals. Black Friday home purchase, anyone? Dang. It may not quite be the time for that proverbial zaftig lady to belt out an aria.

Realtor, TBWS

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