Pacific Equity & Loan

November 2023 – Market Update

Stay up-to-date with the latest insights into the ever-changing housing market by following our market updates. We provide valuable information to help you make well-informed decisions. Join us as we delve into the current state of the market this November.

Are We Finally Seeing a "Balanced Housing Market"?

As of November 16, 2023, mortgage rates have dropped for the third consecutive week to 7.44% for a 30-year fixed-rate mortgage in contrast to the earlier expectation of a steady climb towards 8%. This is expected to positively impact potential homebuyers in 2024, attracting more buyers into the market due to economic strength, lower inflation, and favorable mortgage rates. However, the housing market's direction remains uncertain, largely dependent on the number of homes for sale and their pricing. If homeowner activity increases in response to lower mortgage rates, a more balanced housing market could emerge in the near future.

Increase in Mortgage-Purchase Applications

Mortgage-purchase applications increased by 3% during the week ending November 10, reaching their highest level in five weeks, marking the second consecutive week of growth. This surge is attributed to declining mortgage rates, influenced by easing inflation as indicated in the recent CPI report. With the expectation that the Federal Reserve won’t raise interest rates this year and may even consider rate cuts, house hunters are becoming more active. Sellers are also entering the market, with new listings rising by 3% from a year earlier, the largest increase in two years. The total number of homes for sale is approaching its highest level since the beginning of the year. Various factors contribute to the rise in sellers, including increased homebuyer demand, concerns about potential declines in home prices, and a realization that low mortgage rates are unlikely to return to pandemic-era levels.

Older Buyers Dominate U.S. Housing, Challenging First-Time Homebuyers

In America’s current competitive housing market, older buyers are dominating, with the median age for repeat buyers reaching 58 this year, slightly lower than last year’s record of 59 but significantly higher than the 1981 figure of 36. Grandparents are increasingly outpacing younger, first-time buyers, who now comprise 32% of the market, below the 38% average since 1981. First-time buyers are also typically in their mid-30s today, compared to their late 20s in the early 1980s. In this challenging market, older buyers, often selling a home before purchasing, are wealthier and more likely to secure properties, posing difficulties for first-time buyers, especially in multi-offer situations. The scarcity of available homes prompts sellers to favor buyers with attractive offers, where older individuals, often with more equity or all-cash capabilities, gain an advantage. Jessica Lautz, deputy chief economist at NAR noted that:

“We are still talking about an incredibly difficult market for first-time buyers to enter, even if there’s slightly less competition…If there’s a multi-offer situation, an all-cash buyer or someone who has a lot of equity is likely to win. And that person is going to be older”

Sources: Redfin.com, Realtor.com, The Washington Post

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