Prospective buyers are gaining some leverage in the rapidly cooling US housing market – with homes taking twice as long to sell as they did just a few months ago.
Sold homes sat on the market for a median period of 34 days in the four-week period ending on Oct. 16, according to data compiled by real estate firm Redfin. The 34-day period is more than a week longer than the typical wait one year ago – and twice as long as the record low of just 17 days reported in early June.
The longer waits for home sellers are attributable to a spike in long-term mortgage rates that are now approaching 7% for a 30-year term. With affordability plummeting, consumers are only rethinking their housing situation “if they need to,” according to Redfin economics research lead Chen Zhao.
“Homes will eventually sell, but it may take a few months, and sellers need to meet buyers where they are,” said Zhao. “That means lower prices and negotiations, including things like giving buyers a credit to buy down their mortgage rate and paying for home repairs.”
Buyers who are able to afford the higher mortgage rates should attempt to negotiate a lower purchase price before committing to a deal, according to Zhao.
That’s a major difference from conditions in the middle of the pandemic-era housing boom, when buyers were frequently forced to engage in bidding wars and offer above listing prices to secure homes.
“Try negotiating down the sale price; now’s the time to make what would have been considered a lowball offer six months ago. Ask for concessions and repairs to make up for high mortgage rates,” Zhao said.
At present, the typical US home is selling at a 1% discount compared to its final asking price, according to Redfin’s data. That’s the largest markdown buyers have seen since the early days of the COVID-19 pandemic in August 2020.
The volume of mortgage applications has plunged to its lowest level in a quarter-century due to the higher rates, according to the Mortgage Bankers Association. As The Post reported, home sales and new listings recently fell to their lowest level on record as both buyers and sellers are scared out of the market.
While home prices are still higher than they were one year ago, many experts expect them to fall fast in the months ahead. Pantheon Macroeconomics’ chief economist Ian Shepherdson projected prices will sink 20% in 2023 as the housing market resets.