Home News High-End Pandemic Boomtowns Will Turn in Home Buyers’ Favor This Fall

High-End Pandemic Boomtowns Will Turn in Home Buyers’ Favor This Fall

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After a California couple failed to bid on 10 homes in a year and a half, real estate agent Christine Halton wondered if her clients were giving up.

“They were tired,” said Halton, an agent for Douglas Elliman in Newport Beach, California.

But this month, just as they were calling it quits, they found a home they loved. There were only two of us. They won the offer.

This indicates that the U.S. housing market is finally turning to buyers after months of a seller’s market.

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“Many buyers have taken a step back in the last couple of months,” says Halton.

Buyers in certain U.S. markets may eventually gain the upper hand as rising interest rates slow demand and build inventories.

Re/Max CEO Nick Bailey said: “Buyers have more inventory choices available and are moving away from bidding wars and being forced to offer much higher than the asking price.”

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Luxury market sees price cuts and rising inventories

Data produced by Mansion Global Realtor.com The luxury market seems to be cooling off faster than the market as a whole, and this fall has proven to be an ideal time for buyers.

Across all price points, the number of properties marked down increased by 9.7% year-over-year. However, the top 5% of the market saw an average increase of 95% in the number of discounted properties.

“Across the market, prices are falling, but not as much as the luxury market,” said Realtor.com economist George Raitu.

Data show that the national median price for luxury real estate rose 2.4% from July 2021 to 2022, while the overall housing market rose 16.6%.

“This is a clear indication that these price cuts are starting to hit the luxury segment more severely than the market as a whole,” Raitu said.

Similarly, the luxury market saw an average of 24.6% year-on-year increase in active listings.

Pandemic hotspots begin to cool

Demand increased as buyers realized they could work remotely and live in places that prioritized lifestyles, not just in the secondary housing market, where prices tend to be more volatile than in the primary housing market. You’ll have the best of luck in the so-called pandemic boomtown. .

“It’s the region with the biggest booms and fastest price increases during the contract period of the seller’s market,” Bailey said.

boise, Idaho is one such city. In July, 70% of homes for sale had lower asking prices, down from 30% a year earlier. The number of single-family homes sold around Boise has dropped 33%, and inventory has nearly doubled, according to data from the Intermountain Multiple Listing Service.

A Realtor.com report shows that in certain Phoenix zip codes like downtown and affluent North Scottsdale, the number of homes for sale has more than doubled year-over-year, and the average price has also fallen. .

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Outside of Phoenix and Boise, Bailey expects prices to stabilize in markets such as Las Vegas, Houston and certain parts of Florida, which are also benefiting from the pandemic’s housing boom.

He noted that prices are expected to be more stable in these regions than the accelerated rally seen in the past two years.

“The idea of ​​flexibility to live where you want and work for who you want is taking hold,” Bailey said. “Some of these markets, which experienced a huge boom during the pandemic, remain strong markets overall and will likely stabilize faster than some others.”

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Primary housing market demand remains strong

Buyers heading to cities such as Austin, Texas, Seattle, and Miami with a large influx of jobs may still find themselves in a highly competitive market. But the buyer’s experience varies greatly, largely depending on whether they’re buying in the area where their second home is located or in their full-time residence.

David Siddons knows better than anyone how important the neighborhood is when buying a home. Siddons, an agent for Douglas Elliman in Miami, said buyers are more likely to break out in the volatile secondary condo market than in primary neighborhoods like Coral Gables. increase. We are still seeing great demand from people migrating to Miami looking for work.

“Normally [second-home] Mr Siddons said: “The primary market is doing well. We don’t have enough products and the domestic demand is too strong.”

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As more condo projects hit the market around Miami, inventories will rise and a seller’s market could become a buyer’s market, he said.

Mr. Siddons has already been able to exploit the cooling market to the benefit of his customers. Earlier this summer, he was working with a client who signed a deal to buy his $10 million-plus condo from a developer. Seeing the market move, he went back to the developer and asked for a $1 million price cut.

“The first conversation was, ‘You’re crazy,'” Siddons said. But a month passed and I got a call from a developer. he took a cheaper price.

Mr Siddons said:

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What about interest rates?

It may seem counterintuitive that real estate agents are encouraging buyers to re-enter the market despite rate hikes this year.

Even luxury buyers, who tend to be less vulnerable to rising interest rates than those who buy at lower rates in the market, have been hit this year.

But Halton said the steep price cuts and lack of bidding wars might be reason enough to accept higher rates and act now.

“Don’t get hung up on the fact that interest rates have gone up because the fact remains that we’re still at an all-time low,” Halton said. “There are many opportunities.”

Buying when demand is low is much preferable to buying at a high price when multiple offers are almost guaranteed.

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“Buyers can now come in and make an offer, make a fair market offer, and negotiate with them the best price for the seller,” Halton said. “Buyers don’t have to compromise on size or location. They can take the time to find exactly what they’re looking for.”

Bailey advises buyers to consider other financing options, such as variable rate mortgages and home equity lines of credit.

“The 30-year fixed rate was the only thing people were talking about, but the reality is there are other alternative mortgage products,” he said.

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reach “equilibrium” in the market

From the fall through 2023, the housing market, including the luxury sector, should start to normalize as price growth slows, Raitu said.

“Borrowing costs are likely to continue to rise, which will be reflected in both the economy and the stock market,” Raitu said. When that happens, demand will continue to slow as prices rise.

“Most of the increase in house prices happened in the first half of the year,” Bailey said. “With prices stable, buyers should not expect a significant increase in overall home prices in the second half of the year.”

Take-out? Buyers can breathe a sigh of relief knowing that the days of extreme seller markets are seemingly past.

“I think 2023 will see equilibrium, a good stable market,” he said.

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