The bond market has been all over the place, and we have seen rapid movement in both directions in the past few weeks. We also have many originators that are struggling to produce loans and they are promising (and hoping) rates and fees that currently don’t exist to attract business. While this is nothing new for the industry, those that are desperate are taking this to a whole new level and don’t really care who they hurt in the process. It’s a shame, but people will be hurt and to be honest, little to nothing will be done about it other than maybe a tirade on social media about a loan officer that promised one thing and couldn’t deliver.
The issue is real and sometimes, it may cost people more than just money. It may cost them their chance at home ownership, possibly forever! Think about it, a borderline customer that is all in to make a certain payment and cover certain expenses in buying a particular house, trust someone who offers them the “best rate and lowest fees in town”. They sign a contract, spend a bunch of money on inspections and appraisals to make their dream come true, only to be denied the loan they need because they don’t qualify for the mortgage they need. But they were pre-approved by this lender, there was an LE defining terms that were far from what the original “pre-approval letter” stated and they couldn’t afford the fees or they payment, because the rate they were “sold” was not only not available, but it wasn’t likely available at the time the pre-approval was issued, but it was done to secure the client and have them believe they had “the best deal”.
We have all seen this happen. We know people who do this. What makes it worse is now not only did they overpromise something, but the markets also went the other way so far that the deal is no longer remotely possible! In some cases, these people might NEVER recover. Between the lost money, the lost home, rising prices, and being shattered by the experience; these people may NEVER have another opportunity to buy a home. So please, when you are having conversations with buyers about what may be possible, PLEASE set the proper expectations! Share with them real options and market conditions and remind them that VALUE is far different from PRICE; and the “BEST PRICE” means nothing if it’s not in writing with expiration dates and signatures! A great originator is the last line of defense a consumer has against those that would expose them to losing it all!
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New listings have hit their lowest level of any early June on record, limiting home sales and keeping prices afloat
New listings of homes for sale fell 25% year over year to their lowest level of any early June on record. That’s according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage, which analyzed new listings of homes for sale during the four weeks ending June 4.
The continued lack of new listings has pushed the total number of homes on the market down 5% year over year to its lowest level on record for early June.
Elevated mortgage rates are driving the inventory shortage, with the daily average hitting 6.94% on June 7, near its highest level in two decades. The vast majority of homeowners have a mortgage rate below 6%, discouraging them from listing their home and giving up their relatively low rate.
Limited inventory is keeping national home-price declines relatively modest, with the typical U.S. home price down 1.6% year over year. That’s the smallest dip in three months and half the size of April’s 3.2% drop, which was the biggest in at least a decade. Home prices are still increasing in some parts of the country. The median U.S. asking price is unchanged from a year ago after several weeks of declines, indicating that sellers in at least some metro areas are noticing that they can command favorable prices.
In addition to propping up prices, the scarcity of listings is limiting purchases; pending home sales are down 17%, continuing a yearlong streak of double-digit drops. But early-stage homebuying demand continues to hold up, with Redfin’s Homebuyer Demand Index—a measure of requests for tours and other services from Redfin agents—near its highest level in a year. That indicates that would-be buyers are out there and may make an offer when mortgage rates decline and/or more homes are listed.
“Homes priced under $500,000 are flying off the market because buyers in that price range don’t have many options,” said Sacramento Redfin Premier agent David Orr. “I've been working with one first-time homebuyer for about a year, and she’s adjusted her search as rates have risen. Now that mortgage rates are close to 7%, she’s looking at lower-priced, smaller homes. But the problem we’re facing now is competition: In that lower price range, it takes many misses before you get a hit. She just made an offer nearly $30,000 above asking price for a home listed at $429,000, but she lost out because it had four other offers. I’m advising buyers to get their loan pre-approved and look at homes under budget so they’re prepared to go above asking price.”
Leading indicators of homebuying activity:
Key housing market takeaways for 400+ U.S. metro areas:
Unless otherwise noted, the data in this report covers the four-week period ending June 4. Redfin’s weekly housing market data goes back through 2015. For bullets that include metro-level breakdowns, Redfin analyzed the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy.
To read the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-new-listings-lowest-level-on-record
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