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Realtor Market Insider November 15, 2021

November 15th, 2021 10:54 AM by Richard Sardella MLO.100007700/NMLS 233568


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Predictions indicate the promise of a ‘bleak winter’ will be broken where home sales are concerned

There were times when Realtors not only understood, but practically encouraged home sellers to wait to list their homes until after the holidays — in fact they’d even wait until the first hints of spring to place that shiny “for sale” sign in their clients’ front yards. Winter posed its challenges and everyone assumed it was not the optimum selling season.

This year, however, Realtor’s Chief Economist Danielle Hale predicts anything but a freeze in home sales activity. “Sellers can expect to see plenty of buyers,” she says. Her sentiments are echoed by the National Association of Realtor’s chief economist, Lawrence Yun. “Compared to other past winter seasons, this winter season’s sales activity will be stronger. This winter, there will be more sales compared to pre-pandemic winters going back all the way to 2006.”

Naturally, this optimism stems back to the pandemic lockdown, which created a pent-up demand for homes throughout much of 2020 that completely swamped the usual spring rush, winter lull rhythm of the real estate cycle. And that “overwhelm” phase has not ended.

“We had unusual seasonality in 2020 due to the pandemic shifting timing around for many buyers and sellers,” explains Hale. “While 2021 had much more normal seasonality—homes sold fastest in summer and slower in fall and winter—this year has been a standout for its own reasons.” As 2021 draws to a close, it promises special billing, since from March through October, “homes were selling faster than the fastest-selling months in any previous year,” Hale says. What does it portend? Nothing will change just because the temperature drops below freezing, or even once the holidays kick into high gear.

“Although there are fewer buyers in the winter months than in the competitive spring and summer period, all signs suggest that housing demand remains high,” Hale says. To boot — because supply chain issues slowed new home construction, many buyers just couldn’t find their dream homes in the spring, summer, or fall. That means they will still be looking well into the cold winter months.

Realtor’s Erica Sweeney reports that due to this high demand and limited inventory, “winter is likely to be a better time to sell than winter typically is. “So if you’ve all but written off the idea of selling your home until spring ’22, think again!,” she says.

Held back homebuyers mean deadly serious buyers. “Although the number of homebuyers house hunting this winter may be slightly lower than during the busy spring and summer seasons, these homebuyers mean serious business. As such, Hale says, “Sellers can expect to see homes sell quickly.”

As for home prices, once the genie has not only escaped from the bottle but likes it on the outside just fine, he may not want to be contained again. Home prices are now at an all-time high. While median home prices in the U.S. now hover at $380,000, up 9% from a year earlier, there are signs that these high prices are leveling off.

“The days of fast price gains are over,” Yun says. “There will be few pockets of the market where bidding wars do occur, but sellers should expect much less than what was occurring the past 12 months. Home prices generally will be higher compared to one year ago, but maybe a bit lower compared to what occurred in the summer.”

All-time-low interest rates of the past 20-plus months have a part in this equation as well. As of Nov. 10, interest rates were low, but these rates may be going up by the end of 2021 and even more in 2022. And higher mortgage rates mean reduced purchasing power for buyers. While more homes should hit the market by spring 2022, buyer demand will partly depend on where interest rates go next. Sweeney admits that if they’re up, that “spring rush” of buyers may have their hands tied in terms of how much they can pay for your home.

Ah. And one last element. Where will those who sell their homes live once they hand over the keys? Sweeney says more than a third of home sellers plan to buy a new home after they’ve sold the one they have, placing them in the same hot seat: scrambling to buy a home amid limited inventory and high prices. The old fashioned “contingency clause” just may get dusted off. It’s the stipulation that the sale of one’s home depends on their ability to find a new home within a certain time frame. If the timeframe expires, you can call off the deal. “Just know that this contingency isn’t used that often, since few buyers may be willing to be left hanging like this,” says Sweeney. “Still, in a strong seller’s market—particularly during winter when no one may feel like moving in a blizzard—you might just have a chance.”

Realtor, TBWS

This Week's Mortgage Rate Summary

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 worsened by -93 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that can have the greatest ability to impact your rates this week. 1) The Fed, 2) Retail Sales and 3) Geopolitical

1) The Fed: Speculation continues to mount as to who the next Fed President will be now that Treasury Secretary Yellen explicitly went from "Powell needs to be reappointed" to "we have a few good options" for Fed Chair. We will hear from several talking Feds this week and will focus on employment, inflation, rates, etc. in their commentary:

11/16 Bostic, Harker, Daly

11/17 Mester, Daly, Evans, Bostic

11/18 Bostic, Williams, Evans, Daly, Bowman

11/19 Waller, Clarida

2) Retail Sales: A key measure of our economy, will be released on Tuesday. The last time this was released, it surprised to the upside. Will higher wages help or will inflation concerns cut back on spending?

3) Geopolitical: We have a key summit with Biden and Xi and we will be looking for any news on Tariffs, Taiwan and Trade. Also in focus is the Brexit transition and if Great Britain will trigger Article 16 over some issues with Northern Ireland and the EU.

This Week's Potential Volatility: High

This morning we're seeing a continued sell off after last week. Volatility is high with markets experiencing some small pullback.

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.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 15th, 2021 10:54 AM

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