Home prices are falling and listings are soaring: Could this be a great time to buy despite high mortgage rates?

As the housing market ramps up toward the end of the year and all of its holiday events, it's likely that potential home buyers are wondering what's in store for the upcoming season.
Homebuyers looking for lower prices can officially check this off their wish list. November's median home list price of $417,000 was much more wallet-friendly than June's record high of $449,000, according to a recent Realtor.com® report.
However, the volatile real estate landscape is not quite ready to bring only happy news. High mortgage rates — which as of Wednesday hovered around 6.58% for a 30-year fixed-rate loan — are a stark reminder that many buyers may still struggle on the affordability front.
"Although prices have decreased month over month, they are still up by double digits from a year ago," says Danielle Hale, Realtor.com's Chief Economist. "And with mortgage rates also rising, buying an apartment is more expensive than last year."
This deadly combination of high home prices and interest rates amounts to the fact that median mortgage payments are now about $900 higher each month than they were just one year earlier.
So, while all is not rosy and glamorous in the world of real estate, there are hacks for intrepid buyers.

Stocks are soaring, but is that good news?

After the home buying rush driven by the COVID-19 pandemic reduced the number of homes for sale to an all-time low, housing stock has since rebounded. There were 46.8% more homes for sale in November compared to the corresponding month in 2021.
That translates to another 240,000 more homes for sale on any given day in November. However, the massive increase in listings hides an important caveat: fresh listings are down 17.2% on a year-over-year basis.
Simply put, many potential home sellers decided to stay put and not list. Many are locked into mortgages with extremely low rates that they are reluctant to give up, and cash-strapped buyers simply aren't making offers like they did even a few months ago.
The result? Houses just sit - and sit - on the market, inflating the total number of homes for sale.
"We will see fewer new homes listed on the market now until the end of the year and maybe early next year," Hale predicts.

The real estate markets in the West have slowed down

Certain areas of the United States are suffering from the downturn in the market.
"Sales activity in the West has slowed more dramatically because high home prices in the region are a daunting enemy for buyers who also face higher mortgage rates," Hale says.
Case in point: Phoenix saw its inventory grow 176% on a year-over-year basis. And while the average time a typical property spent on the market reached 56 days in November (up eight days from last year), homes in Phoenix stayed two more days.
"Demand is low," says Brandy Aguirre, a real estate agent at Home Key Realty in the Phoenix metro area. “From August 2021 to April 2022, the active registration count was stable with little change. But in April this changed quickly when the interest rate started to rise."

Can the seller's concessions balance the interest rate increases?

Sellers may not think it's the best time to list homes, but could it be a good time for buyers to buy?
More homes for sale and fewer buyers are helping to empower the few homebuyers out there who can now hold on to a bargain. And the sellers are pouncing: about 19.6% of all homes for sale had to reduce their asking prices to attract buyers in November. And while there likely won't be an end-of-the-year buying bonanza, some intrepid shoppers might just score a few deals.
"What does all this mean if you're looking to buy a home?" Aguirre asks. "May you have all the leverage to negotiate with sellers. More sellers are willing to pay a portion of the buyer's closing costs or pay cash for a lower interest purchase. The sellers lower prices by an average of 3% from the list price - that is, $15,000 on a $500,000 house."
And in addition to direct cash savings, Aguirre finds that sellers are willing to make repairs and accept offers conditional on buyers selling their current home. And perhaps most importantly, the sellers "no longer ask the buyer to make risky moves such as waiving the terms of the evaluation". (A contingency is simply anything a buyer or seller needs to do before closing the deal.)
So despite the rise in mortgage rates, not all buyers should sit on the sidelines and wonder why they didn't snap up a home when prices were low. Instead, they should use their negotiating position with potential sellers.
"If you didn't buy last year, you can't go back in time and buy," Hale advises. "You have to consider what's possible now."

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