"You got a fast car
I want a ticket to anywhere
Maybe we make a deal
Maybe together we can get somewhere
Any place is better
Starting from zero, got nothing to lose."
- Tracy Chapman, "Fast Car," 1988
Lyrics from the beautiful Tracy Chapman, who came back into the limelight after Luke Combs covered her hit "Fast Car," and then played alongside him at the Grammys. It was an incredible performance that brought curiosity. As I listen intently to the lyrics of not just "Fast Car," but the whole album, I see the relevance in our community today. I know at some point we have all felt this yearning to go. We are all working so hard to build something for ourselves. Sometimes I feel like we are working to build something for each other, and sometimes I feel like we are just trying to survive, and if it benefits our community, it is a beautiful cherry on top. Regardless of our feelings, the work we each do every day brings our community further, but we all have our own reasons and intentions.
There's a checkout girl; she gets a promotion, she goes to school, maybe she has to drop out to take care of her family, maybe she marries into a seemingly promising pairing, maybe she's faced with her past and has to make a gut-wrenching decision to move on alone or grapple with the current situation to make it work. The song ends with "You gotta make a decision, leave tonight or live and die this way." Honestly, for some people, buying a house can feel like that; we need to buy a home for life to be more affordable so we can save money, so we can buy a house so life can be more affordable. This song is from the '80s, and people were desperate for housing then, and in recent years, it hasn't made it any easier. We do have hope, though; just stay with me.
The past few years, with interest rates plummeting beyond belief, at one point it was more affordable to finance a house than a car, with interest rates getting in the 2% range.
Homeowners moved quickly to secure lower rates, whether refinancing or upgrading. That surge to the market increased competition for home purchases, with buyers paying not only their own closing costs, down payment, and buying homes in as-is condition but also paying over asking price or even over appraisal, just to be the owner of a home and, more importantly, a <4% mortgage! Builders started building homes at a pace we haven't seen in decades, yet we are still in a housing shortage. We needed more individual dwellings as it was, and the surge of building has most definitely helped, but corporations and venture capitalists got in on the opportunities, buying resale and new construction homes a few at a time, also driving rental prices up, making life less affordable and increasing that gap for people who have never owned a home.
Fast forward to today, with interest rates hovering between 6.5-7.2%, there are buyers (especially people who own a home and are looking for something that more specifically meets their needs) who are hesitant to move forward with a purchase. Decreasing the buyers on the market, the buyers who didn't have the cash to pay over for a house or pay the full closing cost on their own, return to the market. Competition has slowed down on the buyers' side, increasing the days on the market, but not decreasing the value. This increase in days on the market means for many buyers having the seller cover some closing costs has now become a possibility and made the homeownership dream plausible again.
If buyers are returning to the market, why would sellers' days on the market increase? Buyers are still a little shy and will only offer something that truly makes sense to them; it needs to perfectly fit their lifestyle needs, offer a convenient location, and be priced well. In the past, from 2020 to the summer of 2023, you could put almost any price on a home, and someone might take a chance on making an offer, and even then you may have multiple offers driving the price up or hopefully negotiating there not being an appraisal at all, guaranteeing profits at closing. During that time, we had home value appreciation month over month; we are seeing homes appreciate, but it's not month over month at this point. An example: an agent is invited to present a listing presentation, including a marketing plan and price evaluation. The agent observed the same floor plan in the same neighborhood sold for $200,000 two months ago. If the presentation was occurring in the summer of 2021, a competitive price for the home would be $205,000. If the presentation was to occur presently, the most competitive list price would be $200,000. Next year, the same house in either scenario will cost more, but we aren't currently seeing that month-over-month increase. A competitive price for the home will mean fewer days on the market and fewer concessions offered by the seller.
SARAH JANE GIBSON
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