Today’s challenging housing market environment makes finding a buyer difficult and getting the most out of a home sale requires some tactical thinking, according to a recent Opendoor study.
Mortgage rates have hovered above 7%, with little chance that they will drop meaningfully before the end of the year. Buyers are also facing high home prices. This leaves many buyers sidelined over affordability issues and has dampened hopes of a strong spring home season. However, sellers in the market can attract the highest bid by timing when they list their property to make unique features of their home stand out the most to buyers, the study said.
“Opendoor recently analyzed home sales over the past five years across 50+ markets,” the study said. “We found that depending on the season, there are surprising features that can lead a home to sell faster – and for more money. Understanding these seasonal nuances is key to helping buyers and sellers seize their selling season.”
Opendoor’s analysis found that these four features can net a higher close price in the spring vs. winter:
- Homes with a pool close for an average of $34k more in spring vs. winter
- Homes with basements over 1000 sq. ft close for $32k more in spring vs. winter
- Homes on large lots (one or more acres) close at about 5.3% higher in spring vs. winter
- Homes with three or more bedrooms close nearly 5% above winter closes
Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates with multiple lenders at once.
MILLENNIALS ARE DESPERATE TO BUY A HOME, MOST WILLING TO PAY A MORTGAGE RATE ABOVE 7%: SURVEY
Down payments soar above 13%
Buyers in the market continue to make bigger down payments, according to a recent Realtor.com report. In the first quarter of 2024, down payments reached an average of 13.6% and a median of $26,000. While the values are below the third quarter 2023 peak of 14.7%, down payments remain well above the typical 10% buyers saved for before the COVID-19 pandemic.
One reason down payments have soared in the post-pandemic market is increased competition. While that isn’t as much of a factor in the current housing market, limited housing supply continues to make some markets competitive, the report said. Buyers may also want to reduce the amount they borrow and lower their interest payments because of the high mortgage rates.
“One other important consideration is how the overall unaffordability of the market affects who is buying homes,” the report said. “Facing still-high prices and elevated mortgage rates, many of today’s buyers are likely either high earners or buyers using existing home equity—which remains not far off of recent highs—meaning they have more cash on hand to use as a down payment.”
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
SOCIAL SECURITY: COLA INCREASING BUT MEDICARE COSTS RISING TOO IN 2024
Housing supply is building
The silver lining for buyers is that supply is expected to build as home sales lag, which should help gradually contribute to decelerating home price growth, Fannie Mae economists said in a recent report.
To be sure, the number of homes actively for sale increased by 23.5% in March, registering a fifth straight month of growth, according to Realtor.com data. Active listings increased the most in the South, which saw active home listings grow by 35.8% compared with last year. The Midwest saw listings increase by 13.9%, while inventory rose by 12.4% in the West and only 0.3% in the Northeast.
While the growth in housing supply is good, mortgage rates need to drop for affordability to improve, Realtor.com said. Borrowing costs will only drop meaningfully once the Fed dials back interest rates. That will come once the central bank is confident that inflation will reach a 2% target rate.
If you’re considering becoming a homeowner, it could help to shop around to find the best mortgage rate. Visit Credible to compare options from different lenders and choose the one with the best rate for you.
THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Read the full article here
