The Federal Reserve’s rate increases and ongoing inflation are already affecting the housing market across the U.S. Ribbon surveyed real estate agents about the trends in their areas to assess the extent of the real-world impact and gain a clearer picture of the shifting market. The Q3 survey and market data findings indicate that buyers and sellers face a new set of challenges, but also that Ribbon’s solutions provide viable options for those looking to buy and sell homes in a challenging market.
Around 80% of survey respondents reported housing price drops in their areas, and market data provides proof of falling home prices. Price drops rose by 11 more points or more in the Tampa, Charlotte, Dallas-Fort Worth, Denver, and Nashville areas.
As to what kinds of offers are closing deals, cash is king, with more than two-thirds of respondents identifying cash offers as the kind that are winning the most deals in their markets. Cash ranked much higher than high deposits at 36% and seller possessions at 17%.
Although 57% of agents said that competition has decreased, sellers still have their pick of buyers. Sixty percent of respondents said they are still getting multiple offers “frequently” or “every time.”
Market data points to a steady pace of sales in many regions. In the Denver, Dallas-Fort Worth, Atlanta, and Tampa areas, the median number of days on the market is still below 30, and Cincinnati’s median sales window shrank by three days.
In July 2022, the Federal Reserve raised rates to the highest levels since December 2018. The Q3 survey showed that buyers were already feeling the pain of increased mortgage rates. More than two-fifths of respondents said buyers have been forced to reduce their maximum home prices. Twenty-two percent of agents said buyers were more reluctant to make an offer, and more than a fourth have had buyers stop searching for new homes entirely.
Sellers have also felt the effects of rising rates. More than half of all agents had deals fall through at the last minute and/or have needed to make concessions to close deals.
Overall, the Q3 survey shows buyers are struggling. They continue to face competition when bidding on homes, yet rising mortgage rates limit their ability to make the highest bid. Although home prices are falling, the previous market boom meant many houses were selling well above value. As a result, buyers still aren’t finding bargains. Without the ability to make large offers, buyers now need the flexibility to make cash offers to beat out the competition.
These challenges facing buyers translate to headaches for sellers. After cash offers, no-contingency and waived contingency offers were the second biggest winners, with half of agents identifying them as deal-makers. In a market where many buyers may back out at the last minute or ultimately be unable to borrow, cash and no-contingency offers give sellers a much-needed sense of certainty.
Although much about the market is changing, Ribbon’s benefits for buyers and sellers remain strong.
With RibbonCash Offers, buyers can turn offers into cash and give sellers certainty that their homes will close after inspection. All-cash offers from Ribbon eliminate home selling and inspection contingencies, further strengthening the seller’s sense of security. Buyers also benefit from Appraisal Protection, which guarantees the contract price up to Ribbon Max Value and prevents low appraisals from derailing closings.
With experts predicting further rate increases from the Fed and a continued cooling of the market, Ribbon can provide what buyers and sellers need most in these challenging times: a guarantee that a deal will close.
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