Are Buyers on the Move Again?
We have a lot to talk about in this video - the CPI news on January 12th, the Fed rate announcement coming up on February 1st, our latest local housing data, and a change in buyer behavior over the last few weeks.
You’ve heard it all week - the CPI or Consumer Price Index decreased by 0.1%. Click here to learn more.
This is good news, but it's not the entire story.
According to David Meyer, VP of Data and Analytics from Bigger Pockets:
“The Core CPI tells a different story, with prices rising 0.3% in December, up from 0.2% in November. This is obviously not great, as the pace of inflation went up monthly, and the Federal Reserve is very focused on the Core CPI. 0.3% monthly inflation is still way too high.”
So why did so many people cheer about this news?
David Meyer continues:
“...when looking at the last few years, there is a clear sign that things are heading in the right direction. Throughout 2021 and 2022, Core CPI growth was regularly above 0.4%, so seeing it come down to about 0.25% over the last three months is encouraging. But there’s still work to do”.
For the entire article, click here:
The Fed wants the annualized target of inflation to be at 2%. Time will tell, but I’m optimistic that the worst of inflation is behind us unless some major events upset the markets.
With the most recent CPI data and the potentially lower Fed rate hike, mortgage interest rates seem to be coming down slowly. In late October, rates were hovering above 7% according to Freddiemac.com, and as of January 12th, the average 30-year fixed mortgage rate was 6.33%! This could save homebuyers a few hundred dollars per month in mortgage payments! We are seeing even lower rates for our clients using the VA loan right now.
How is this affecting our local housing market?
We are going to look at two statistics this week to understand our local housing market in December 2022.
The two stats are:
2. Percentage of sales with seller concessions
The median sold price of single-family-homes decreased 1.2% from November with a median sold price of $840K. Inventory was very low. Our region had only 288 detached homes come to the market in December. That’s nearly 29% less homes new to the market than December 2021. I will chalk some of this up to seasonality in the market, but that’s the lowest inventory levels we’ve had in 5 years for December. We’ll be watching the inventory levels for next month because demand is starting to rise due to the slightly lower interest rates.
Our team researched the MLS data and discovered that 31% of sellers provided a median closing cost credit of $10,387 to their buyers.
A seller closing cost credit (concession) can be used by the purchaser to offset his or her closing costs, prepaid items or discount points to buy down their mortgage rate. There are limits, so reach out to our team so that we can share with you what the maximum seller contribution for each loan type is. Also, be sure to discuss seller concessions with a reputable lender.
Our team has noticed a spark in the Northern Virginia housing market -- we've seen an increased number of home showings, more attendance at open houses and more buyers putting in offers on properties. We are even hearing of some properties receiving multiple offers over the last few weeks.
As of January 18th, 239 of 555 properties went under contract that were listed on or after January 1st 2023. These properties were in the City of Alexandria, Arlington, City of Falls Church, City of fairfax and Fairfax County. That’s 43% under contract in less than three weeks!
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