February 6th, 2023 12:15 PM by Richard Sardella MLO.100007700/NMLS 233568
Higher
Fewer Buyers are seeking Fixer-Uppers:
Fixer-uppers have traditionally been popular with investors, who could get these homes at a discount, put some work into them, and then resell them at a hefty profit. And this popularity soared in the early portion of the pandemic. However, with home prices falling from their peaks over the summer, many investors are now increasingly pausing their purchases. If prices dip, even a little, they could lose money on their projects. And many of the larger iBuyers have either exited the market or aren’t buying as much at the moment. That’s left less demand for these properties.
So they’re staying on the market longer and sellers are having to drop the price on these homes or accept lowball offers.
“Buyers want those homes [only] when there is no other inventory out there,” says Matt Curtis, owner of his eponymously named brokerage in Huntsville, AL.
Even in today’s more challenging housing market, “anything that is staying on the market for more than 48 hours [without a booked showing] is in a less desirable location and definitely not in tiptop, showable condition, says Princeton, NJ–based real estate agent Debbie Lang. She works for Berkshire Hathaway HomeServices Fox & Roach Realtors.
She recently saw a home priced below $1 million that received eight offers.
What’s not selling are properties “that need a major renovation and updates, like a new kitchen or bathroom and major systems,” says Lang. “Buyers are always looking for improvements that have already been done.”
Those problems can be overlooked if the home is in a great location, such as near a train station or in a community with top-rated schools, she says. But buyers could get a discount on these properties.
Money isn’t the only obstacle to purchasing a home that needs some TLC.
On Cape Cod, a popular vacation destination on the Massachusetts shore, it can be difficult to get work done, says local real estate agent Doug Payson, with Kinlin Grover/Compass.
“Because of the supply chain issues, it’s often difficult to get materials. There’s also a shortage of workers,” says Payson. Meanwhile, “properties that you don’t have to do anything to are seeing, like, 12 offers.”
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: Higher
Mortgage rates are moving higher today. The MBS market improved by +1 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Higher
These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Treasury Sales, and 3) Central Banks
1) The Fed: After last week's shift from unconditionally-hawkish to conditionally-hawkish, the markets have hedged (bet) that they FOMC would need to moderate their policies this year. Now that the FOMC meeting is over, so it the media blackout period among Fed speakers and we will have a slew of them this week.
02/07 Fed Chair Powell
02/08 Williams, Waller, Barr, Bostic
02/09 Kashkari, Waller, Fed Balance Sheet
02/10 Harker
2) Treasury Sales: While the political theater continues to unfold as the government attempts yet another debt ceiling raise, the Treasury will conduct three auctions with the most important (for backend pricing) being Thursday's 30 year bond auction.
02/07 3 year note
02/08 10 year note
02/09 30 year bond
3) Central Banks: We get a key interest rate decision out of Australia and we get key speeches out of the Bank of England and the European Central Bank this week.
This Week's Potential Volatility: High
This morning markets have dropped into a lower trading channel. Volatility has started high and is likely to remain that way as the Fed continues to hammer at inflation.
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.