Contingent buyers can now win a home!
In recent years, the real estate market has been heavily tilted in favor of sellers. However, a new trend is emerging that is giving hope to contingent buyers – those who need to sell their current home in order to purchase a new one. In the past, sellers didn't have to accept contingent offers, but now, there seems to be a shift in the market dynamics. For quite some time, sellers held the upper hand in the real estate market. With limited housing inventory and high demand, they could easily find buyers who were willing to pay top dollar. This created a challenging situation for contingent buyers who found themselves stuck in a catch-22 predicament. They couldn't make an offer on a new home without selling their current one, but they couldn't sell their current home without finding a new one. This made it incredibly difficult for them to compete in a seller's market. However, things are changing. The tides are slowly turning in favor of buyers, particularly those with contingent offers. Sellers are now more open to accepting these offers, understanding that they may be the key to selling their property in a timely manner. This shift can be attributed to a variety of factors, including housing inventory and a more balanced market overall. One of the main reasons sellers are becoming more receptive to contingent offers is the realization that their home may not sell as quickly as they initially anticipated. In a competitive market, sellers often received multiple offers within days of listing their property. However, with the current market conditions, properties are staying on the market for slightly longer periods. This change has made sellers more willing to entertain contingent offers when they don't have a lot of buyer choices to consider. It is critical for the seller to consider how quickly their buyers home will sell. How prepared are they to list it, how long will it take etc. In North Carolina we've been focused on due diligence fees for several years. That is money the buyer pays over to a seller right after going under contract and that gives the seller assurance that the buyer won't back out. While that is critical, Earnest Money will also become more important again because we need the buyers to have a level of urgency to get their home under contract or be more obligated to the home they are buying so the whole thing doesn't drag out. Technically item 4c on our contract indicates the buyer needs to have their home under contract or be able to reasonably assume it will close prior to the end of due diligence, a seller can't force them to back out. In conclusion, the real estate landscape is evolving, and contingent buyers are finding themselves in a more advantageous position. The market is no longer solely favoring sellers, and they are now more willing to accept offers from buyers who need to sell their current home. This change is a breath of fresh air for contingent buyers who have been struggling to navigate the seller's market. With a more balanced market and increased options for financing, contingent buyers are finally starting to see their dreams of homeownership become a reality.
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Pending Home Sales Grew 1.1% in September
Key Highlights Pending home sales increased in September, up 1.1% from August. Month over month, contract signings increased in the Northeast, Midwest and South but decreased in the West. Pending home sales fell in all four U.S. regions compared to one year ago. " data-src="https://www.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/downloadable/2023-09-pending-home-sales-housing-snapshot-infographic-10-26-2023-1000w-1500h.png?itok=Q65HyHD2" class="b-lazy" width="1000" height="1500" alt="Pending Home Sales, September 2023"> See and share this infographic. WASHINGTON (October 26, 2023) – Pending home sales augmented 1.1% in September, according to the National Association of REALTORS®. The Northeast, Midwest and South posted monthly gains in transactions while the West experienced a loss. All four U.S. regions had year-over-year declines in transactions. "Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years," said Lawrence Yun, NAR chief economist. "Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated." The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – rose 1.1% to 72.6 in September. Year over year, pending transactions declined 11%. An index of 100 is equal to the level of contract activity in 2001. NAR forecasts that the 30-year fixed mortgage rate will average 6.9% for 2023 and decrease to an average of 6.3% in 2024, while the unemployment rate will lower to 3.7% in 2023 before increasing to 4.1% in 2024. NAR predicts existing-home sales will decrease 17.5% in 2023, settling at 4.15 million, before rising 13.5%, to 4.71 million in 2024. Compared to last year, national median existing-home prices are projected to remain stable in 2023 – edging higher by 0.1% to $386,700, before increasing by 0.7% next year, to $389,500. Housing starts will drop 10.4% from 2022 to 2023, to 1.39 million, before rising to 1.48 million, or 6.5%, in 2024. "Because of homebuilders' ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates. This underscores the importance of increased inventory in helping to get the overall housing market moving," said Yun. NAR expects newly constructed home sales will grow from last year by 4.5% in 2023, to 670,000 – because of additional inventory in this market segment – and increase by another 19.4% in 2024, to 800,000. The national median new home price will drop by 5.9% this year, to $430,800, and improve by 3.5% next year, to $445,800. Pending Home Sales Regional Breakdown The Northeast PHSI increased 0.8% from last month to 63.1, a loss of 12.7% from September 2022. The Midwest index expanded 4.1% to 74.3 in September, down 9.2% from one year ago. The South PHSI rose 0.7% to 87.1 in September, retreating 10.7% from the prior year. The West index declined 1.8% in September to 55.3, dropping 12.9% from September 2022. "Sales are expected to turn positive by early next year, with affordable regions and fast job-creating markets in better positions to recover, led by the Midwest and South," added Yun. About the National Association of REALTORS® The National Association of REALTORS® is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics. # # # *The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues. The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population. NOTE: Existing-Home Sales for October will be reported November 21. The next Pending Home Sales Index will be released November 30. All release times are 10 a.m. Eastern. View the NAR Statistical News Release Schedule.
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September 2023 Existing-Home Sales Fall to Lowest Level Since October 2010
NAR released a summary of existing-home sales data showing that housing market activity this September declined 2.0% from August 2023. September's existing-home sales reached a 3.96 million seasonally adjusted annual rate. September's sales of existing homes weakened 15.4% from September 2022. " data-src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-existing-home-sales-september-2022-to-september-2023-line-graph-10-24-2023-1300w-657h.png?itok=sfIINPmv" class="b-lazy" width="1200" height="606" alt="Line graph: Existing-Home Sales, September 2022 to September 2023" title="Line graph: Existing-Home Sales, September 2022 to September 2023"> The national median existing-home price for all housing types reached $394,300 in September, up 2.8% from a year ago. " data-src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-us-and-regional-median-sales-price-of-existing-home-sales-september-2023-and-2022-bar-graph-10-24-2023-1300w-608h.png?itok=zlwWvobg" class="b-lazy" width="1200" height="561" alt="Bar graph: U.S. and Regional Median Sales Price of Existing-Home Sales, September 2023 and 2022" title="Bar graph: U.S. and Regional Median Sales Price of Existing-Home Sales, September 2023 and 2022"> Regionally, in September, all four regions showed price growth from a year ago. The Northeast had the largest gain of 5.2%, followed by the Midwest with an incline of 4.7%. The South increased 3.1%, while the West region rose 1.8%. September's inventory of unsold listings as of the end of the month was up 2.7% from last month, standing at 1,130,000 homes for sale. Compared with September of 2022, inventory levels were down 8.1%. It will take 3.4 months to move the current inventory level at the current sales pace, well below the desired pace of 6 months. Inventory conditions continue to be a challenge for potential home buyers. It takes approximately 21 days for a home to go from listing to a contract in the current housing market. A year ago, it took 19 days. " data-src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-inventory-september-2022-to-september-2023-bar-graph-10-24-2023-1300w-558h.png?itok=81r9-ygM" class="b-lazy" width="1200" height="515" alt="Bar graph: Inventory, September 2022 to September 2023" title="Bar graph: Inventory, September 2022 to September 2023"> From a year ago, all four regions had double-digit declines in sales in September. The West had the biggest dip of 19.3%, followed by the Midwest, which fell 18.4%. The Northeast decreased 16.7%, followed by the South, down 11.7%. Compared to August 2023, three of the four regions showed declines in sales. Only the Northeast had an incline of 4.2%. The West region had the biggest decline in sales of 5.3%, followed by the Midwest with a dip of 4.1%. The South region had the smallest decline last month of 1.1%. The South led all regions in percentage of national sales, accounting for 46% of the total, while the Northeast had the smallest share at 12.6%. " data-src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-regional-existing-home-sales-and-year-over-year-percent-change-bar-graph-10-24-2023-1300w-703h.png?itok=mOCT-hDx" class="b-lazy" width="1200" height="649" alt="Bar graph: Regional Existing-Home Sales and Year-Over-Year Percent Change" title="Bar graph: Regional Existing-Home Sales and Year-Over-Year Percent Change"> In September, single-family sales decreased 1.9%, and condominium sales were down 2.3% compared to last month. Single-family home sales were down 15.8%, while condominium sales fell 12.2% compared to a year ago. The median sales price of single-family homes rose 2.5% to $399,200 from September 2022, while the median sales price of condominiums inclined 6.8% at $331,300. " data-src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-regional-existing-home-sales-and-year-over-year-percent-change-bar-graph-10-24-2023-1300w-703h.png?itok=mOCT-hDx" class="b-lazy" width="1200" height="649" alt="Bar graph: Regional Existing-Home Sales and Year-Over-Year Percent Change" title="Bar graph: Regional Existing-Home Sales and Year-Over-Year Percent Change"> " data-src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/economists-outlook-year-over-year-percent-change-in-single-family-and-condominium-existing-home-sales-january-2020-to-september-2023-line-graph-10-24-2023-1300w-775h.png?itok=8ErRau6g" class="b-lazy" width="1200" height="715" alt="Line graph: Year-Over-Year Percent Change in Single-family and Condominium Existing-Home Sales, January 2020 to September 2023" title="Line graph: Year-Over-Year Percent Change in Single-family and Condominium Existing-Home Sales, January 2020 to September 2023">
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