A housing cooldown — but a costly one

Plus, a lawn-care good luck charm

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  September 17, 2022 | Issue #60

Good morning! This week we’re talking home price declines, affordability and TikTok’s latest lawn trend. This issue of Money Moves was written by Aly J. Yale.   A clear sign of cooling off Money; Getty Images If you wanted further sign that housing is cooling off, just look to Sarah Hansen’s latest story. Apparently, homes are now selling for below listing price — for the first time in 18 months. It’s quite the about-face from the market we saw just months ago, when bidding wars caused buyers to go significantly over asking just to stand a chance. But the times, they’re definitely a-changing. Rising mortgage rates and inflation have hit hard, and many would-be buyers have pulled out of the market. As a result, sellers are having to be a bit more reasonable — not to mention willing to negotiate. As economist Daryl Fairweather recently put it, “Homebuyers’ budgets are increasingly stretched thin … so sellers need to make their homes and their prices attractive to get buyers’ attention.” It’s certainly good news for home shoppers — and not just for their pocketbooks. This newfound leverage is also giving them more time to shop. Only about a quarter of homes went under contract within the first week of listing last month. That’s down 30% from a year ago (and a much-needed reprieve for stressed-out buyers). For more: Housing Market Retreat: More Homes Are Selling for Below Asking Price Big price tag, small home: Shrinkflation Hits $1 Million Homes: Buyers Are Paying Top Dollar and Getting Less   35% of your income Homebuyers might be catching a break on pricing lately, but they’re certainly not getting a bargain. In fact, according to data provider Black Knight, housing affordability is now at a 35-year low. Yes, really. Buying a home hasn’t been this unaffordable in over three decades. Thanks to high mortgage rates (over 6% these days) and years of rising prices, it now takes over 35% of the country’s median income to afford a typical monthly mortgage payment — and that’s just for principal and interest. Property taxes, mortgage insurance and home insurance costs only eat into those earnings further.  The one upside is that this affordability crunch will likely slow demand even further, which might mean more price cuts down the line. Say goodbye to bidding wars: Housing Market Update: Price Cuts Are In, Bidding Wars Are Out A decade in decline: Zillow Says Home Values Just Fell for the First Time in a Decade   What are the chances? Money; Getty Images A few months ago, the idea that home prices would soon decline was laughable. But now? It’s becoming a real possibility — at least according to consumers. Fannie Mae’s latest Home Purchase Sentiment Index — which gauges what the American public thinks about housing conditions — shows that 33% of consumers think home prices will fall within the next 12 months. That’s up from 30% in July and a “substantial” jump, according to the mortgage purchaser’s chief economist Doug Duncan. More consumers also expect mortgage rates to drop, too. According to the survey results, 11% think rates will fall in the next year vs. just 6% the month prior. (To be clear, the vast majority — over 60% — still think rates will keep rising.)  They aren’t huge percentages, but they do offer a glimmer of hope for an easier homebuying future. As Money writer Sarah Hansen eloquently put it, “Consumers finally see light at the end of the tunnel.” For more: For the First Time in 2 Years, People Think Home Prices Will Fall A new market: 4 Ways the Housing Market Is 'Wildly Different' From Just a Few Months Ago   A lawn-care good luck charm Shutterstock Tired of all the upkeep and costs that having a lush, green yard comes with? Then hop on the latest TikTok trend and start planting some clovers. It’s no joke. The hashtag #cloverlawn has 66 million views on the app so far.  Dive down the rabbit hole yourself, and you’ll find countless yards full of fluffy, bright green clovers that, apparently, take only weeks to grow.  Users say they’re also cheaper and easier to maintain, and they don’t require much water either.  “I leave it alone,” one #cloverlawn owner told New York Times writer Anna P Kambhampaty. “I spend zero resources on it.” Sounds like my kinda lawn. Think it’s HOA-approved?   Happy hunting, P.S. Spot a weird or unique home listing? Share it with me on Twitter, where I’m @alyjwriter, or via email at alyjyale@gmail.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.   Money’s Essential Home Buying Resources: Summer 2022 On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips. Key question: How much house can I afford?

This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money. Privacy Policy • Advertise With Us • We're Hiring! To stop receiving these emails, unsubscribe or manage your email preferences. Copyright ©2022 Money Group, LLC. All rights reserved. Metro Office Park Calle 1, Building 7 Suite 204, Guaynabo, Puerto Rico 00968, USA