See how lenders are stepping up to support brokers and buyers in a tough market
While it’s hard to make a blanket summary of the housing market due to its hyperlocal nature, many signs are pointing to buyers having an advantage in large parts of the country.
With mortgage rates continuing to climb along with Treasury yields, and a Fed rate hike potentially on the horizon, many markets are seeing a large increase in housing inventory. According to Redfin, it is leading to a record buyer’s market in many areas.
Sellers outnumbered buyers by 57.9% nationally in August, the widest gap Redfin has recorded since it began tracking the measure in 2013, according to a report published Thursday. That surplus is being driven largely by a wave of new listings across Sun Belt metros, including Nashville, Miami and Houston, where sellers outnumber buyers by more than two to one.
There were an estimated 1.53 million home sellers active in the market nationwide in August, the most since the start of 2020, while the number of active buyers barely moved from July's record low. Nashville alone saw an estimated 139.3% more sellers than buyers, the widest gap of any metro Redfin tracks.
On paper, that kind of imbalance should hand buyers real leverage. Home price growth has already cooled to 1.6% year over year across the nation's buyer's markets, compared with 5.5% in the five remaining seller's markets, according to Redfin.
Having more room to negotiate does not help a buyer who cannot qualify for the loan in the first place, and elevated rates and prices are still keeping plenty of would-be buyers on the sidelines, particularly those sitting just above conforming loan limits.
Kyle Schoenmaker (pictured top), SVP of sales at Rocket Pro, said navigating a market like this requires brokers to think outside the box.
"In a challenging market, it really requires a lot of the lenders to be creative with the solutions that they're providing," Schoenmaker told Mortgage Professional America. "If I had to offer one piece of advice for all of the brokers out there, it would be to stay curious. Now is the best time to ask questions, find the best competitive advantage for them, and make sure that they're doing truly what's right by their clients and by their business."
Navigating a challenging market
Asad Khan, a senior economist at Redfin, said that while buyers have an advantage in some areas, it doesn’t mean that sellers are willing to give unlimited concessions to get a deal done.
"With sellers piling into the market and demand falling flat, today's house hunters can afford to be choosy," Khan said. "Even during a time when housing costs are elevated, the surplus of sellers over buyers makes it a good time to be a house hunter, in some respects. Buyers shouldn't assume every seller will budge, especially on a desirable home that's already priced well, but they don't need to rush into a deal that doesn't feel right."
With market conditions becoming more challenging, lenders are stepping in to try to help. In addition to the pricing benefits it announced last week at RPX, Rocket announced a bump in conforming loan limits on Thursday.
Rocket Pro raised its conforming loan limit to $845,000 for one-unit properties, ahead of the Federal Housing Finance Agency's own annual adjustment.
Schoenmaker said the change is aimed squarely at borrowers who sit just above where conforming pricing would otherwise apply.
"Any inch that we can give to our partners to help their clients get into a more fortuitous situation is definitely something that we hold in the highest regard," he said. "Conforming loan limits most of the time are easier to qualify for, and usually you can get them at better pricing."
It’s not just Rocket making pricing moves to mitigate the challenging market conditions. United Wholesale Mortgage announced yesterday an extension of the company’s Bullseye 90 pricing incentive for brokers and the removal of high-balance LLPAs through October 30 as a way to help more buyers get deals closed.
Continuing the conversation
For Rocket, the move to bump conforming loan limits continues a trend from the last few years, according to Schoenmaker.
"We've done it over the last couple of years, and we're very fortunate that we're able to continue this momentum," he said. "For our partners, this is something where we're hoping to use this to surface conversations with folks who might have been on the fence in the past."
What Schoenmaker finds most encouraging about the months ahead is the conversations happening between lenders and brokers right now.
"In tough markets come some of the best creative solutions," he said. "A lot of times when we just ask our partners the questions, ‘Where are you winning in this market? What are some of the things you need help with?’ We're getting a lot of really good dialogue, a lot of really good collaboration, and that's something that excites me about the upcoming years."
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