- Mortgage rate hikes on top of already high prices are scaring away many potential buyers.
- But as the competition between buyers cools, home sellers are starting to lose their influence.
- Fredrik Eklund says homebuyers now have more power to negotiate real estate deals.
A change of mood is taking place in the real estate market.
In recent years, a lack of housing inventory has led to intense bidding wars that have kept home prices at historic highs. But as mortgage rate hikes scare away many potential buyers, competition is cooling, which means sellers are losing leverage.
As market dynamics begin to change, New York-based real estate broker Fredrik Eklund has some advice for homebuyers who are still in the game.
“Inventory goes up and you have more opportunities there,” Eklund Told NBC 5 News.”I tell my buyers, try to be second in line.”
With fewer people competing for homes, buyers now have more bargaining power. Data from real estate brokerage firm Redfin shows that across the country, 14.9% of homes under contract in June failed due to buyer apprehension. With the exception of March and April 2020, the June reading was the highest percentage on record.
Because of this, Taylor Marr, deputy chief economist at Redfin, says buyers now have more say in their home buying decisions.
“Slower competition in the housing market is giving buyers some bargaining wiggle room, which is one of the reasons more of them are pulling out of deals,” Marr said in a statement to Insider. “Buyers are increasingly retaining rather than foregoing inspection and appraisal contingencies. This gives them the option to cancel the transaction if issues arise during the home buying process.”
Now that the market is moving in favor of the buyers, Eklund says they should approach the bidding wars strategically.
“You want to be second on the list, so when that deal fails, or the escrow fails, or they can’t get the financing, maybe you can even renegotiate your deal at an even lower value,” a- he declared.
According to Redfin, a growing share of home sellers are now lowering their asking price as buyer demand wanes due to weaker sentiment. Brokerage data shows that in June, the highest share of sellers on record lowered its list price as mortgage rates deterred home buyers.
“The housing market isn’t crashing, but it’s experiencing a hangover as it comes down from an unsustainable high,” Marr said, adding that rate hikes will continue to stretch homebuyers’ budgets. to the point that many more could be assessed.