Homebuyers Find Relief as More Homeowners Consider Selling, Report Reveals

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According to the latest monthly report from real estate marketplace Zillow®, homebuyers are beginning to find some relief as more homeowners consider selling their properties. Despite a rise in inventory, competition for homes remains relatively stiff.

“Buyers found significant savings as rates fell. However, mortgage rates are fickle, and they’ll play a massive role in determining appreciation and affordability — especially for first-time buyers — going forward in 2024,” said Skylar Olsen, Zillow’s chief economist. “Fortunately, rate lock appears to be wearing off for some homeowners, who show encouraging signs that they’re ready to come back to the market.”

Zillow’s recent survey revealed that 21% of homeowners are considering selling their homes within the next three years, up from 15% a year ago. Interestingly, the survey found that the homeowners’ consideration to sell was almost the same whether they had a mortgage rate above or below 5%. This marks a significant shift from six months ago when homeowners with rates above 5% were nearly twice as likely to consider selling.

The survey suggests that owners with low rates are warming up to the idea of selling, while those with higher rates probably purchased their house fairly recently. Current mortgage rates appear to be less of a determining factor when considering a sale.

Home buying is becoming more affordable again, at least by some measures. Monthly payments for a new mortgage on a typical home are now $1,790 — $143 less than in October. For the first time since April, a new mortgage with a 20% down payment now takes less than 33% of the median household income. However, this is a national average, and prices remain so high that many households in expensive metros cannot qualify for a mortgage.

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Inventory continues to improve, albeit slowly. Inventory made its first annual gains since April, and levels are now 36% below pre-pandemic averages, an improvement over the 46% deficit seen in May.

However, a lack of choices means buyers are unlikely to find price cuts and should expect competition for the most attractive listings. Listings are still going under contract in about a month — 50% faster than pre-pandemic norms. Zillow data shows that nearly 30% of homes nationwide are selling for more than their original list price, compared to about 20% in 2018 and 2019.

As the housing market continues to evolve, homebuyers and sellers will need to navigate these shifting dynamics carefully. The decision to buy or rent in 2024 will require careful consideration of personal savings, investment prowess, market expectations, and plans for long-term residence. The trends highlighted in Zillow’s report could prove instrumental in guiding these decisions.

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