‘I know it when I see it’

Plus, Priced to perfection and Bright lights, big cities

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  October 22, 2022 | Issue #65

Good morning! This week we’re talking about buyer’s markets, dropping list prices  and the best big cities in America.   ‘I know it when I see it’ Eddie Lee for Money The housing market is changing. A key question for anyone hoping to buy a home in the not-too-distant future is whether it has changed enough to qualify as a buyer’s market. Plus, how can you tell? Normally, if you scanned the country you would find some housing markets favoring buyers, some favoring sellers and some that are balanced between the two. Since late 2020, however, sellers have had the advantage just about everywhere. That’s starting to change. If you’ve bought or sold a home in recent years (or tried to) you know what a seller’s market looks like. High prices. Quick sales. Lots of competing offers. As the name suggests, sellers hold the power and call the shots. A buyer’s market is just the opposite: Those on the hunt have the upper hand. This means they can negotiate everything from contingencies to sale prices. It all definitely has a “I know it when I see it” quality — to borrow the famous 1964 Supreme Court quote on pornography — but there are some tell-tale signs of a buyer’s market. Rising inventory: In San Francisco, the number of active listings is currently about 6,000 a month. At the start of the year only about 2,000 homes were listed for sale in the city. Slower sales: In Los Angeles, it’s taking a median of 32 days for homes to sell. Compare that to Cincinnati, where homes are typically listed for just 6 days, or the national median of 18 days. Moderating prices: Again, we look to San Francisco, where prices were down more than 5% in August compared to a year earlier. Nationally, prices were up approximately 8% over the same period.  According to an analysis by home-financing startup Knock, only seven of the nation’s 100 largest markets currently favor buyers. (Seventy-one remain sellers' markets and the rest are neutral.) However, all but six markets are moving in a buyer friendly direction. For more: The Housing Market Is Shifting Almost Everywhere — But Are We in a Buyer's Market Yet? Related: Cities Where Homebuyers Now Have the Advantage Over Sellers   Priced to perfection Money; Shutterstock A record 22% of home sellers had to drop their listing prices in September, according to new data from real estate brokerage Redfin. That’s a big change: Only 6% to 7% of sellers were reducing asking prices at earlier this year and in 2021. The jump in price cuts is a clear sign of a more buyer-friendly market (see above), but it also reflects the challenge of fast-rising mortgage rates. With current mortgage rates approaching 7%, the monthly mortgage payment on a median-priced home is up 51% from a year ago to $2,559. As my colleague Sarah Hansen writes: “Fewer people in the market can afford that kind of expense, hence the need for sellers to cut their list prices.” Mortgage rates also help explain why the number of homes sold dropped 25% between September 2021 and last month, while new listings also fell 22%. For more: Home Sellers Are Slashing List Prices at a Record High Rate   Bright lights, big cities Getty Images You love Money’s annual Best Places list, but you are not the kind of person who would live in a small town. Lucky for you, Money just published a list of the best big cities in America. Population = 600,000 or more Fun fact: An estimated 83% of the U.S. population lives in urban areas. By 2050, the share is expected to jump to 89%. For more great places: The 50 Best Places to Live in the U.S. Confused why I am writing in the second person? Read this book.   BTW Mortgage rates inched closer to 7% this week — but didn’t cross the line. How to FSBO. Not Abe Lincoln’s log cabin.   Happy hunting, P.S. Share your signs of a buyer’s market with me on Twitter @samsharf or via email at sam.sharf@money.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: Fall 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