Why You SHOULD Buy a Home This Fall: Buyers are facing a sweet spot in the market as 9.2 percent of sellers are cutting prices

Homebuyers are facing a sweet spot in the market this fall as the number of sellers cutting prices has reached their highest level this year, a new report claims.

Data from property portal Zillow shows that 9.2 per cent of homes had their asking prices reduced in the week to September 23 – compared to 6 per cent in April and 7.9 per cent in the same week in September 2019.

Although there is a cooldown after summer every year, economists noted that the trend has accelerated this fall.

The figures offer a glimmer of hope for buyers suffering from a perfect storm of rising mortgage rates and higher home prices.

Zillow senior economist Jeff Tucker wrote in a report: “For determined buyers, with enough budget room to absorb the recent rise in mortgage rates, this fall is increasingly looking like a good situation.

“There are overall more motivated sellers and more active listings than at any time since December last year, increasing buyers’ chances of finding the right match.”

He added that the cuts seemed to suggest that “buyers have backed out, sellers have overpriced, or a combination of both.”

The proportion of homes sold above asking price also fell from a peak of 41.9 percent in June to 38.3 percent in the week to August 12.

It marks an apparent end to the rampant bidding wars that took place during the pandemic, as homeowners became desperate for larger properties with more outdoor space.

In addition, the flow of new listings increased in August after trending downward since last July.

Tucker said it was too early to say whether this marked an end to the “quotation draw,” adding that buyers still have “plenty of reason to hesitate now” thanks to rising interest rates.

The average fixed rate on a 30-year mortgage currently hovers at 7.31 percent, according to the latest data from government-backed lender Freddie Mac.

Rates haven’t risen since 2000, reaching 8 percent, according to data collected by Freddie Mac

Borrowing has been driven up by the Federal Reserve’s aggressive campaign to raise interest rates to a 22-year high to curb rampant inflation.

Higher rates are putting pressure on the real estate market as potential buyers are reluctant to move.

Many signed up for 30-year deals when interest rates hovered between 2 and 3 percent. It means a homeowner with a $400,000 property now faces monthly payments of about $2,608, assuming a five percent down payment.

But if the same buyer had entered into a deal in September 2021 – when interest rates were still 3 percent – ​​their monthly payments would be $1,000 cheaper, at $1,602.

Despite the fact that the rates have a cooling effect on demand, the limited housing supply has ensured that prices have remained artificially high.

Real estate affordability reached its worst level since 2006 in August, according to the Atlanta Federal Reserve.