Helping Your Clients Win in a Cooling Housing Market
It’s natural for some potential borrowers to look at a cooling housing market – and the change in interest rates that helped to turn down the heat – as a losing situation. But they can be reminded that this recent shift can be turned to one’s advantage.
Cooling Means Leverage
And leverage is something homebuyers have had in short supply in the recent red hot seller’s market in which bidding wars were all too common. As the pool of potential buyers thins, sellers have less negotiating power. Of course, cooling doesn’t mean an end to multiple offers on homes, but there’s less of a chance that fierce competition will cause a surge in home prices. And with this regained leverage, buyers can win with a return to adding contingencies, such as inspections and appraisals, to their offers.
Cooling Means Lower Prices
A cooling market doesn’t mean bargain basement sales, but prices have been falling in numerous major housing markets. And many financial experts say prices are expected to fall in the future, with modest declines in much of the country, and possible sharp declines in areas that saw price surges over the past few years. While few potential homebuyers like the rise in mortgage rates from their historic rock-bottom lows, that increase does put demand and affordability in the win column for buyers.
Cooling Means More Choice
Another bright side of the cooling housing market, there’s been an increase in for-sale supply over the past few months, a significant turnaround from the extreme for-sale supply shortage of the past few years. More choice and less competition is a winning combination for buyers.
Cooling Means More Time to Shop
The days when panicked buyers rushed to put in offers on homes over fears of missing out are dwindling; homes are staying on the market longer. In August 2022, a typical home was for sale for an average of 26 days, a change from the on-average 17 days that homes stayed on the market in June. Even hot, fast-selling properties have been affected by the shift. In August 2021, 43% of homes were sold in two weeks, and that declined to 35% a year later. This means you can advise your clients to take deep breaths and use this extra time to find the homes they truly want.
To talk about how you and your clients can win with Luxury Mortgage, or to become an approved broker, contact us today.