A Year Unlike Any Other
In what can only be described as an unprecedented year for residential real estate, buyers faced a gale of obstacles: mortgage rates soared to a 23-year peak, sales plummeted to a 13-year nadir, and home prices surged to record highs, all conspiring to erode affordability to its thinnest since 1984.
Yet, against this daunting backdrop, approximately 4.5 million individuals embarked on the journey of homeownership this year—nearly four million snapped up existing homes, the National Association of Realtors reports, while just over half a million opted for new construction, per the US Census Bureau.
A Strategy for Success
“Jumping in and out of the market wasn’t how they did it,” reveals Jen Davis, an expert agent and co-owner of Holt Homes Group. Successful buyers this year shared a common denominator: a steadfast commitment to their home-buying strategy. “The ones who were successful in buying a home this year weren’t just the ones who bought in all cash or the ones who bought down their rates,” Davis explains. The secret? They prioritized what mattered most in their quest for a home.
“The ones who were successful in buying a home this year weren’t just the ones who bought in all cash or the ones who bought down their rates,” Davis explains. The secret? They prioritized what mattered most in their quest for a home.
The Affordability Equation
Compromise became a keyword for buyers this year. Davis observes, “Maybe they expanded their search beyond their initial neighborhood choice, but they found terms that worked for them.” With the median home price soaring and mortgage rates reaching a staggering 7.79%, buyers and sellers alike navigated the affordability puzzle with creativity and concessions.
Home Condition vs. Creative Financing
Buyers desiring move-in-ready homes faced stiff competition and full prices. Davis advises such clients to explore all avenues, from gift funds to down payment assistance, crafting an offer that resembles the straightforward allure of cash.
The Luxury of Time
The market’s pace has shifted, agents note, allowing buyers more time to deliberate. Parisa Afkhami of Coldwell Banker Warburg shares her experience of guiding a client for over a year to a successful purchase, adapting strategies to combat rising rates and shifting market dynamics.
The Market’s New Direction
The year’s challenges were felt by all, says Erin Sykes, chief economist at Nest Seekers International. As sellers began to adjust expectations, the market saw a glimmer of hope, a sentiment echoed by the recent dip in mortgage rates and incentives offered by new construction homebuilders.
Looking Ahead: Opportunity Amidst Challenges
Despite the hurdles, some buyers chose properties needing TLC, eyeing future refinancing opportunities. “They may pay less for the house and get a more expensive rate,” Sykes says, “But they can refinance in the future. That risk will pay off for people who took it on.”