HOME SALES TICK UP IN DECEMBER

In December, pending home sales increased 2.9 percent from November, the first month-over-month gain since October 2021, according to online brokerage Redfin.

The company also reported December increases in the number of people contacting its agents and requesting home tours.

“The small uptick in pending sales suggests some homebuyers returned to the market at the tail end of 2022 after demand plummeted in the fall,” Chen Zhao, Redfin’s chief economics researcher, said in comments quoted by Business Insider. 

Mortgage interest rates “traveling down instead of up are helping some sidelined buyers get back into a house-hunting mindset,” she added.

After climbing to almost 7 percent last September, the average rate on a 30-year, fixed-rate mortgage dropped to 6.18 percent as of 28 January, NerdWallet said.

“I’ve seen more homes go under contract this month [January] than in the entire fourth quarter,” Angela Langone, a Redfin agent in San Jose, California, told BI. 

“Mortgage rates aren’t stopping people as much as they were at the end of 2022, now that they’re down from their peak and sellers are more willing to negotiate,” she added.

December’s good news does not constitute a housing recovery, Redfin warned.

Market conditions vary across the country, with December sales still down year over year. Also, a recession, economic slowdown, or flabby job market could push the market back into reverse, the company said in a statement.

TREND FORECAST: The U.S. Federal Reserve will raise interest rates at least twice before July, forcing mortgage rates higher. That will push back against pent-up demand, delaying the housing industry’s stronger recovery as the spring and summer selling season approaches.

House-hunting and sales will pick up in the months ahead, but those higher rates, the increasing likelihood of a recession, and the ominous outlook for the jobs market also will keep the market cool through at least the first half of this year.

Again, as we had long forecast, there would be a housing slump, but no housing bust.

MORE HOME SELLERS ARE CUTTING PRICES AND OFFERING INCENTIVES

With sales of existing homes falling for 10 consecutive months, and buyers fewer than in the recent past, some sellers are not only cutting their asking prices but also hoping to entice buyers with special incentives, Business Insider found.

In 2022’s fourth quarter, 41.9 percent of sales involved sellers offering concessions such as money for repairs or paying points to give the buyer a lower mortgage interest rate, online brokerage Redfin reported.

“Buyers are asking sellers for things that were unheard of during the past few years,” Phoenix Redfin agent Van Welborn said in the company’s recent housing market report. 

“They’re feeling empowered, partly because their offer is often the only one, and partly because they know sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions,” he noted.

In the fourth quarter, a record 19 percent of Redfin’s sales incorporated a concession after the listing price had already been cut.  

“We don’t have inventory [houses for sale],” broker Brian Lewis with Compass said in a recent Fox News television interview. “In New York City, Richmond, Chicago, Los Angeles—it’s tight.” 

Because high-interest rates have sidelined many potential buyers and relatively few homes are up for sale, “homebuyers have way more power” than sellers, he added. 

“It took a while, but seller expectations are coming back down to earth,” Welborn said. “Sellers realize they’re not going to get $80,000 over the asking price like their neighbor did last year.”

TREND FORECAST: The housing market is beginning to normalize but the lack of inventory, the scarcity of buildable land, and high mortgage interest rates will restrict sales for the foreseeable future. The coming recession will cancel any improvement in the market. But again, while we forecast an Office Building Bust, minus a wild card event, like war in the Middle East that will drive oil prices above $100 per barrel and crash equity markets and economies, we do not forecast a housing market bust. 

MOST MILLENNIALS REGRET THEIR RECENT HOME PURCHASE, POLL FINDS

Eighty-two percent of Millennials—people roughly in their mid-20s to mid-40s—have at least one significant regret about buying a home recently, according to a survey of 1,000 people by Clever Real Estate, an online agent referral service.

Many bought during the housing frenzy that roiled the market over the past two years. A quarter of those polled said their home value has decreased since they bought it; another quarter found their mortgage payments to be uncomfortably expensive.

Forty percent said they regret buying in the location where they are. Many expanded their geographic search area when their primary choice of locations had nothing for them. Rather than lose out altogether, they bought in places they now are not happy with.

A quarter of Millennials who bought homes needing repairs regretted that decision. Many have found themselves unable to afford the upgrades they had planned.

Other disappointments:

● 30 percent of survey respondents reported having bad neighbors;

● 30 percent said their neighborhood has changed too much;

● 30 percent said that maintaining a home is too expensive.

TREND FORECAST: Disgruntled Millennials whose mortgages are not under water will constitute another possible group of ready sellers when the housing market stabilizes.