Watching The Housing Market
🚀 What’s happening: Two recent changes in the housing market are worth paying attention to…
First
A federal judge in Missouri found the National Association of Realtors liable for $1.8 billion in damages for conspiring with large brokerage firms to keep commissions high.
We are now waiting for the appeals process to play out, but in all likelihood the days of a 6% brokerage commission on the sale of your house may be over soon.
Second
Don’t look now, but housing affordability is starting to see (small) improvements.
Mortgage rates have seen one of the biggest drops in several years; the average 30 year rate today is now sitting at 7.87% vs. 8.08% on October 31st.
Also, Redfin just reported that 7% of homes for sale on their site reported a price drop in the last week, the largest proportion on record.
While these are small changes, we have been searching for any signs at all of the home buying market taking a better turn, and this recent data has us a bit more hopeful that rates and affordability are headed in a better direction.
Be sure to keep your eye on the 30 year rate from here on out, as it should react to the CPI report this week as well as all inflation and interest rate data points we get through the end of the year (you can track the average 30 year fixed rate at this site and check out our free mortgage calculator here).
👪 Closer to home: When it comes to the Missouri lawsuit, should the appeals process fail (most indications currently are that it will), the repercussions on home buyers and sellers will be as follows:
More flexibility for sellers and buyers. Under the current system, sellers pay their own agent’s commission of about 5% to 6% of the selling price. This commission is usually shared with the buyers agent, but if that goes away now the buyer would have to pay their own agent (if you choose to use one) at a flat or hourly fee. If you are a seller, your agent payment may go down and you may get to keep more of your home’s selling price.
More savings needed for buyers. For homebuyers or investors in real estate, the ruling will likely add another cost to the home buying process. Make sure to consider what your broker will cost (ask them up front) when you look to buy a home.
More on home buying and ownership:
