A Sudden, Positive Shift in Economic Indicators

“For the third sixth straight week, mortgage rates trended down, as new data indicates that
inflationary pressures are receding. The combination of continued economic strength, lower
inflation and lower mortgage rates should likely bring more potential homebuyers into the
market.” Freddie Mac (FHLMC)

Stock and bond markets – which greatly impact household wealth, consumer confidence,
and interest rates – were generally characterized by deep pessimism in October, but with
significant changes in economic indicators such as inflation, and a continued pause in
benchmark rate increases by the Fed, financial markets abruptly shifted to enthusiastic
optimism in November. That translated into a dramatic plunge in mortgage rates, which has
caused mortgage applications to increase over recent weeks.

Since the homebuying process usually takes 30 to 60 days, from loan qualification and

making an offer to a closed sale, sales might see a bounce in December, or – since the mid-
winter holiday period typically sees the annual low point in new-listing (and thus sales)

activity – more likely in early 2024 (subject to these positive trends continuing).

In January 2023, buyer demand saw a substantial rebound due to a similar drop in interest
rates in late 2022.

Highlights from the “2023 Profile of Home Buyers and Sellers“

Published by the National Association of Realtors®, 11/13/23

The typical first-time buyer was 35 years old; the typical repeat buyer was 58.

☐ 59% of buyers were married couples, 19% single females, 10% single males, and 9% were unmarried couples.

30% of buyers had a child under 18 in their home (down from 58% in 1985).

13% of buyers purchased a new-construction home; 87% bought a previously-owned home. Buyers typically searched for 10 weeks before purchasing. Approximately 5% – 10% purchased without seeing the property in person, using only online materials (per Realtors® Confidence Survey) 14% bought a multi-generational home – for care of aging parents, cost savings and to accommodate children aged 18+ years moving back in.

The typical home purchased had 3 bedrooms, 2 baths, and 1,860 square feet of living space. Senior-related housing constituted 19% of purchases (involving buyers over the age of 60). The median distance between the home purchased and the home moved from was 20 miles. ☐ 60% of buyers cited quality of neighborhood as the most important factor in location. 45% cited proximity to friends and family and 39% housing affordability as major factors.

80% of buyers financed their purchase, down from 87% in 2021. The typical downpayment for first-time homebuyers was 8%, and for repeat buyers, 19%.

The typical home seller was 60 years old, and had lived in their home for 10 years before selling. 63% of sellers reported moving within the same state, moving a median of 35 miles.

Homes sold were on market for a median 2 weeks, selling at a median of 100% of final list price. 89% of buyers and sellers worked with a real estate agent. 7% of sales were for-sale-by-owner (FSBO) – 57% of FSBO sales involved parties who already knew each other. Less than 1% of sales involved an ibuyer firm.

*Data copyright, National Association of Realtors®: https://www.nar.realtor/research-and-statistics/research- reports/highlights-from-the-profile-of-home-buyers-and-sellers. Used with permission. Data was collected via a

survey of recent U.S. home buyers and sellers who completed a transaction between July 2022 and June 2023. Data from sources deemed reliable, but may contain errors and subject to revision.

COMPASS

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis. Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Photo use under the Creative Commons License: https://creativecommons.org/licenses/by-sa/2.0/

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.