CNBC relayed a report that Realtor Dot Com released this week, indicating that the average home was listed for just 61 days before it was purchased and taken off market, which is the quickest listing to sale date pace ever recorded.
For both new homeowners and those selling their property to either upsize or downsize into a new home, the question has been what will my new rate look like. 2021 saw historically low mortgage rates fall under 2%, and, despite rates beginning to rise market-wide, rates between 2-3% still appear to be available for qualifying buyers.
Metro areas and markets have seen the fastest sales growth recently. Nashville, Tennessee, for example, saw an average listed-on-market time of just 29 days. Las Vegas was slightly higher, at a 38 day average, while Seatlle saw an average listed-on-market time of 39 days.
Market Suffering From Super-Lean Supply
When comparing the top of this calendar year to January of 2021, we see new listings were down by 9%, with total inventory dropping by 28%. In a nutshell, folks who are currently house hunting are finding a serious lack of supply.
With new listings at record lows, homes hitting the market are selling extremely fast. The good news for homebuyers is the dreaded 2022 interest rate spike hasn’t completely hit yet, meaning rates under 3% are still out there. Minimizing your monthly mortgage payment can still be accomplished as long as you compare quotes carefully and pick the right lender.
When examining the national picture, we see that real estate markets in the South experienced the largest year-to-year decline in the number of days it took from listing to property sale date. Turning to the northern midwest, the Minneapolis market saw their time on market uptick a bit, while the Mid-Atlantic region, particularly Richmond, Virginia, and Washington, D.C., also saw an increase when it came to time on market for listings.
From Listing to Closing
It’s a harsh reality of the real estate market: closings can take a while to complete. With the current labor shortage, record inflation, and the dragging pandemic, market conditions are only getting more tenuous when it comes to a potential interest rate spike.
This is why mortgage market experts around the country are encouraging homeowners to review their options now in order to lock in the lowest interest rate possible on their new mortgage. 30 Year Fixed rates under 3% can still be had, depending on your credit score and several other factors.
The bidding war for new homes is palpable right now. In many instances, properties are going under contract in a week or less, receiving multiple offers, with some cities seeing consistent offers well over the listing price.
Why January 2022 Was a Whole Different Beast
Typically, January is one of the slowest months on the real estate market. This past January, however, was an entirely different animal, with competition among house hunters peaking in a way we’ve never seen before.
When looking at the spring housing market, we usually mark Presidents Day weekend as the jumpoff point. But this year, slowly rising mortgage rates may scare off some potential buyers, while most will be savvy enough to step on the gas a bit in order to lock in a rate under 3% before they’re gone for good.
It’s an issue of what market experts call “super lean supply.” Home builders, developers, and construction crews have been hamstrung by escalating costs for both land and materials, while simultaneously being hampered by supply chain issues and a serious labor shortage.
With Mortgage Rates Rising, the Time to Act Is Now
The mortgage rate uptick has even caused some sellers to hesitate before listing their properties. Most homeowners right now are holding mortgages with rates under 3%. But the average 30-Year Fixed rate mortgage will soon be shooting up towards 4%.
Which all leaves our current homeowners pondering the possibility of paying more for the same amount of real estate debt they’re already holding. Rising rates means a loss in purchasing power. So for house hunters looking to move into that new property, if they want an interest rate at or near 3%, the time to act is now.
The reality is that home prices are not going to decrease any time soon. As they continue to skyrocket at a faster and faster pace, the only thing we can do is wait for sales to drop, which will finally cause prices and competition to cool off a bit. Until then, house hunters seeking new mortgages with rates near that 3% mark are going to have to make a decision: act now or risk losing the chance to grab a historically low interest rate once and for all.