Well, I guess buyers are choosing to play with fire.  Inventory notches down again despite lowered interest rates, and purchase applications were only barely positive at 0.92%.
Why do I say playing with fire?  Interest rates are down a whole percentage point lower from earlier this year while inventory is going down.  This breeds a situation of high competition.  Buyers that are waiting for a further dip in rates could find themselves wanting.  Yes, it is expected for rates to come down, but we don't know how far down.  Not to mention the low inventory props prices up.  So, currently, we have a situation where rates are at a digestible level NOW with not as much inventory as before AND also not so much buyer competition evidenced by purchase apps.  This newsletter will continue to watch weekly purchase apps like a hawk.
On a similar note, but on the sell side, I had a brief but good conversation with a buddy of mine.  He expects sellers to wait for 5.5% interest rates before they feel comfortable in this market making the move as an upgrade or second home.  Remember, most sellers are also buyers.  If we know this then waiting for a certain percentage could be a mistake.  First of all, we don't know how low rates will fall, only that we expect them to.  We also don't know how long it will take to get to 5.5% or lower.  Second, when/if rates get that low how many buyers will be entering the market at those marks? I would expect an absolute flood of purchase applications.  This would likely include both traditional sellers that are buyers and first time home buyers.  The traditional sellers that need to sell to buy will now be contingent to buy, thus they will be submitting a much less attractive offer compared to a first time buyer without a sell contingency.  Not to mention, how much money is the traditional seller spending every month in their current mortgage and housing payments while they wait for rates to drop even further than current levels?  Would it not be a better idea to list sooner than later and take advantage of the low inventory now?  I think so.  This is another reason to watch purchase applications moving forward.  A big jump in applications will lead to high buyer demand about 30-45 days later once pre-approval is finalized, which could prove an excellent time to list and get the most bang for your buck.
I'll be watching.  Do you want a personal update if purchase applications hit over 10% in a week?
 

What are you seeing or hearing? I'd love to know paul@guiderealestate.com
Visit www.paulpelettarealtor.com