CHM Blog

The great markdown

They say just about anything will sell — for the right price, that is. And right now, in markets stretched thin from pandemic-era wishful thinking, sellers in some areas are finally getting the memo.

Realtor.com's Snejana Farberov identified 10 major metro areas — mostly in the South and West — where listings are most frequently seeing three or more price reductions before finding a buyer. Austin, Texas, topped the list, with 22.2% of January listings having been cut at least 3 times. That's nearly double the national average of 10.7%.

Austin-based researcher Vaike O'Grady offers important context. Austin's pandemic-era boom was fueled by extraordinary demand and a flood of out-of-state buyers. Now that the inflationary fever has broken, she says sellers are "finally coming to terms with what a normal market feels like." As of November, Austin carried 10.5 months of supply — second highest among the 50 largest U.S. metros, trailing only Miami. More supply means more choices, more time, and more negotiating power for buyers.

San Antonio came in second at 22%, followed by Tampa at just under 21%. Count Indianapolis, Jacksonville, Dallas, Orlando. Portland, Phoenix, and Denver and the picture becomes clear, as Florida broker Cara Ameer puts it plainly: "If there aren't showings or offers, no matter what kind of marketing you do, it is all about the price." She notes that many of these sellers aren't testing the market — they're moving because life demands it. They’re divorcing, downsizing, making a move to assisted living or unloading a rental property at long last. These are people who need to sell.

Ameer describes Florida's market correction as slowly deflating balloon, with values that were once propped up by rock-bottom interest rates and pandemic migration now settling back to earth. Higher borrowing costs, HOA fees, and insurance premiums have accelerated the deflation.

Realtor’s senior economist Jake Krimmel calls these markets "a who's who of buyer-friendly metros," where demand remains soft and inventory keeps building. In Austin, the median listing sits at $455,000 and is staying on the market nearly 10 days longer than a year ago. In Tampa, the typical home priced at $399,727 is lingering more than two weeks longer than last January — the biggest annual slowdown among the top 10.

For buyers, that's the headline to watch. "This is an opportunity to pick up a property at a realistic price without the competition and pressure like there used to have been," Ameer says. She expects spring to bring even more inventory — and even more leverage for buyers who are paying attention now. In a more balanced market the asking price is just a high water mark starting point.

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market worsened by -7 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Manufacturing and 3) The Consumer.

1) Geopolitical: The bond market will be taking a long view of the new Tariff entanglement, the President's State of the Union address, and probable Iran military action.

2) Manufacturing: Have we actually turned the corner? After more than 3 years of contraction in the manufacturing base, we have had a recent run of expansionary manufacturing data. This week get Chicago PMI, Factory Orders, Richmond Fed and Dallas Fed.

3) Consumer: Consumer Sentiment on Tuesday will be key. It is expected to rise to 88.0, readings above 90 can be negative for rates.

This Week's Potential Volatility: High

This morning markets are moving sideways. Volatility has started at moderate levels but will likely increase later in the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.