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Homebuyers are facing a market ‘sweet spot’ 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 9.2 percent of listings had their asking prices slashed in the week to September 23 – compared to 6 percent in April and 7.9 percent in the same week in September 2019.

While a post-summer cooldown occurs every year, economists noted the trend had accelerated this fall.

The figures offer a glimmer of hope to buyers who are suffering a perfect storm of soaring mortgage rates and elevated house prices.

Zillow senior economist Jeff Tucker wrote in a report: ‘For determined buyers, with enough budget room to accommodate the recent jump in mortgage rates, this fall is looking more and more like a sweet spot.

Homebuyers are facing a market ‘sweet spot’ this fall as the number of sellers cutting prices has reached their highest level this year, according to data from Zillow

‘There are more motivated sellers and more active listings overall than any time since last December, improving buyers’ chance to find the right fit.’

He added the cuts appeared to suggest ‘either buyers have pulled back, sellers have overreached with too-high list prices, or some combination of both.’

The share of homes being sold for over their asking price also declined 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 rampant bidding wars which occurred during the pandemic when homeowners desperately sought out bigger properties with more outdoor space. 

What’s more, the flow of new listings increased in August – after being on a downward trend since last July.

Tucker said it was too soon to say whether it signaled an end to the ‘listings draught,’ adding buyers still have ‘ample reason to be balking right now’ thanks to soaring interest rates.

The average fixed-rate on a 30-year mortgage is currently hovering at 7.31 percent, according to the most recent data from Government-backed lender Freddie Mac. 

Rates have not hit 8 percent since 2000, according to data compiled by Freddie Mac

Loans have been pushed up by the Federal Reserve’s aggressive campaign of hiking interest rates to a 22-year high to tame rampant inflation.

Higher rates are putting pressure on the property market as would-be buyers are reluctant to move. 

Many locked into 30-year deals when rates were hovering between 2 and 3 percent. It means a homeowner with a $400,000 property now faces monthly payments of around $2,608, assuming a five percent downpayment.

But had the same buyer fixed in September 2021 – when rates were 3 percent – their monthly payments would be $1,000 cheaper at $1,602.

Despite rates having a cooling effect on demand, limited housing supply means prices have remained artificially high. 

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

Content source – www.soundhealthandlastingwealth.com

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