The housing market is cooling down, but it’s still a tough time for buyers

For months, a mix of high inflation, high interest rates, and low supply has meant that homes for sale have been seized at explosively high prices.

According to the Case-Shiller National Home Price Index, prices are 43% higher than in early 2020 and, as it happens, the number of homes on the market is 43% lower than in 2019.

Recently, however, the market has been showing signs of cooling. Dozens of major real estate markets across the country see homes stay on the market longer and prices drop. This includes Houston, where prices fell 4.5% from their high point earlier this year.

LaTisha Grant, executive management broker of TAS Realty Group in Houston, joined with Amy Scott of Marketplace to talk about what she hears from buyers and sellers. Below is an edited transcript of their conversation.

Amy Scott: Give me an example of how long a home may have been on the market now compared to, say, a year ago.

LaTisha concession: Oh my God. So I have an ad on a street called Pebble Brook in a suburb called Missouri City, and it’s been on the market for over 30 days. If this had been a list I had last year, it would have been on the market for maybe three days and I probably would have received 27 offers already.

Scott: Oh my God. Yes, that’s a nice twist. And in a way, it sounds like good news for buyers, right? Because, you know, people have simply been banned from the market in these bidding wars. Now that the houses are staying a little longer, are some of them starting to see any hope?

Grant: For those who are available in the market, I will say yes – this is a great time for them. But so many were discouraged from entering into a long-term lease, not because they found comfort in the rent. But my conversation in response to them is that, with inflation, the rent goes up. So even if you can afford the rent today, when it’s time to renew the lease, that rent will increase and most likely be inaccessible as well.

Scott: And on the other hand, of course, the reason homes stay on the market longer is these higher mortgage rates. How does this affect accessibility for especially first time shoppers?

Grant: So for us here in Houston, “affordable” doesn’t look the way it used to. So it’s a little daunting for many of our entry-level first-time buyers. But whenever we talk about first time buyers, it is a stigma that they are low to middle income buyers. But we have many of our millennials entering the home ownership market at an above-average list price. So they are not interested. However, our voice, our low to moderate first-time homebuyers, are greatly impressed.

Scott: Well, you and I met when I was in Houston to report on the gap between home ownership between black and white families, and there was a big campaign to increase ownership of the black home you were a part of. I wonder what the long-term impact of this accessibility challenge might be in achieving the goal of bridging that gap?

Grant: Yes, so that has a big impact on the goal of increasing home ownership for African American and minority buyers. What it has done is gain the awareness of many other individuals. So now there are more people joining the campaign to boost those numbers. However, with interest rates and price ranges on the rise and African American incomes do not represent such increases, we are a little firm in our rates, our purchasing power.

Scott: And the sellers? You know, we got used to the sellers’ market, and they raised their prices and, you know, took a lot of stock. Are people starting to get a little more realistic and maybe lower their asking prices?

Grant: Yes, they are crying a little. They are not happy with it. But not only are they becoming realistic about the asking price, they also need to be realistic about repairs. You know, during that time when people were bidding, high buyers, you know, sellers didn’t have to do any repairs because it was so competitive. If you asked them for something, you were turned down.

Scott: Right. People were even giving up on inspections.

Grant: Exactly. So now I’m like “Well, do I have to do this?” and I’m like, “If you want to keep the offer, you might want to go ahead and make those repairs.”

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