It Started: Homebuyer Demand Just Collapsed - Buyers Getting 20-40% Discounts!

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NOW MIGHT ACTUALLY BE A GOOD TIME TO BUY

Mortgage rates are around 7.5%, affordability is near record lows, and most people think buying a house right now is a terrible idea. But beneath the surface, the housing market is shifting in a way we have not seen in more than a decade. Sellers now dramatically outnumber buyers, pending sales have fallen, and buyers are finally gaining leverage.

THE AFFORDABILITY TRAP

The median home sold for roughly $417,500 in September, while mortgage rates have moved sharply higher. On the same house, a higher interest rate can add hundreds of dollars per month to the payment. Buying a home has rarely been this expensive on a monthly basis, which explains why so many buyers have stepped away.

THE HOUSING MARKET IS SPLITTING

There is no single housing market. Some cities have fallen significantly from their pandemic highs, while others continue reaching new records. Austin, parts of Florida, Seattle, San Jose, and Orlando have seen weakness, while several markets in the Northeast and Midwest remain much stronger.

WHY SOME MARKETS ARE FALLING

Many of the weakest markets built enormous amounts of new housing during the boom. Prices also rose much faster than local incomes could support, while insurance, taxes, and other ownership costs increased dramatically. When demand slowed, those markets were left with too much inventory and not enough buyers.

WHY OTHER MARKETS KEEP RISING

Watch on YouTube · Video by Graham Stephan