Lew Sichelman
It’s time to place the for-sale existing house on the endangered species list, right alongside the African forest elephant, the Yangtze finless porpoise and other critically threatened varieties.
Whether you can afford to buy a place at today’s lofty prices really doesn’t matter: You cannot purchase what’s not for sale, and existing homes just aren’t for sale. Not enough, anyway.
The resale market is “starved of supply,” said consultant John Burns, noting that sales are on track for their worst year since 2008.
The market is generally considered balanced – that is, not favoring either buyers or sellers – when a five- or six-months’ supply of houses are for sale. At today’s slow sales pace, that would mean some 2.4 million houses would have to be available for a balanced market. Right now, the inventory is about 1 million houses short of that figure, and the deficit will likely continue well into the new year.
The number of resale houses has been this low before, and even lower – it was under 2 million in January 2021, for example, and again in December 2021, continuing through February 2022. Still, the inventory this October was at a record low – the lowest for the month since the National Association of Realtors began tracking that benchmark in 1999.
And while competition among buyers for the same property may have eased a bit of late, more than a third of all buyers this year still paid more than the asking price, according to research from Clever Real Estate.
More than half of recent buyers and nearly two-thirds of rookies admit they overpaid. About a third lamented the fact that they jumped too quickly rather than sticking to their plans and budgets. Most swapped a desirable location and a shorter commute in order to buy their new place.
Almost universally, sellers had regrets, too, the research found. Four in 10 said selling was more difficult than they expected, and nearly 3 in 10 griped about the sales commission they paid. Almost that many said they had to make too many concessions to land a buyer.
Just over half the sellers said they had to reduce their asking prices, and about 45 percent rejected an offer, only to settle for a lower one later on.
As the market turns.
Homebuilders Draft on Brand-Name Ads
The makers of consumer products spend millions of dollars to build their brands – and savvy homebuilders are taking advantage, showcasing those products in their marketing materials.
As an example, a builder’s video tour might include lengthy shots of the top-branded refrigerator in the kitchen, including several shots with the fridge doors wide open. After various appliance color choices and door options are shown, the camera moves on through the rest of the kitchen, then to the next room.
By putting, say, brand-name appliances in the spotlight, builders believe they are building trust and credibility with their customers. It’s an effective strategy called “ingredient branding,” and it’s a great way to showcase what’s inside, says builder marketing firm BDX.
Consumers not only trust established brands, the firm says, but they will pay more for branded products.
Help in a ‘Brutal’ Market
Rob Chrane, the CEO of Down Payment Resource, is often asked whether the assistance programs his firm tracks can make a difference in today’s “brutal” housing market. He instinctively answers in the affirmative – and now he has the data to back him up.
With analytical help from the Urban Institute, a nonpartisan think tank, DPR found that nearly 44 percent of all purchase-money mortgages made in 2022 were potentially eligible for help with the borrower’s down payment and/or closing costs. Worse, 3 in 10 mortgage applicants who were rejected might have been approved if they’d had a little extra help.
The good news: The state and local housing agencies that tend to administer assistance programs – along with some private entities – are rolling out new ones every day, including some that buy down the interest rate for eligible borrowers. Chrane reports that 54 new programs were introduced in the third quarter of 2023 alone, bringing the total nationwide to 2,256.
Every state has at least one assistance program, and many have several.
Foreclosure Uptick Feared
The foreclosure process can be lengthy or short, depending on where you live. But either way, going through a foreclosure is a mentally taxing journey.
Right now, foreclosure starts are on a slight downward trend, according to analytics firm ATTOM. But after the holidays, they’ll likely head back up.
“Foreclosure filings continue to paint a concerning picture,” said ATTOM CEO Rob Barber. “We do foresee a continued uptick in 2024 as foreclosure filings make their way through the pipeline.”
