Mortgage rates have doubled to over 7% since the Fed raised interest rates in 2022.
At a rate of 7%, the median monthly mortgage payment for a $392,200 home is roughly $2,800, near a record high, according to a Redfin analysis. At a rate of 3%, that monthly payment would be close to $1,800.
This makes buying a home less affordable, with monthly payments for a median-priced home nearly double what they were at 3% rates, according to a Redfin analysis.
Historically, 6% mortgage rates are normal, but very low rates during the pandemic spoiled many buyers.
Fannie Mae doesn’t expect rates to return to 3% in our lifetimes but predicts a more normal range of 4.5% to 6% in the coming years.
Fannie Mae forecasts rates to fall below 7% as early as the start of next year, with home price growth also slowing down.
The law is changing and starting August 17, 2024, all realtors and their clients will be affected. This change in business practice is the result of a lawsuit against the the National Association of Realtors. Until now, it was fairly common to work with a buyer to find a house without requiring the buyer to sign a ‘Buyer Representation Agreement”. A buyer would simply contact a realtor and the realtor would help them find a house to buy. The new rules state that before the realtor can show that buyer any homes, the buyer will have to first sign a Buyer Representation Agreement, which will bind the buyer to pay for his agent’s commission, with the amount negotiable between the parties. Until now, it was customary for the seller to pay commissions to his own realtor (the listing agent), who would then offer a portion of this commission (usually half) to any cooperating realtor who would bring a buyer. Because of this, the buyer did not have to pay any commissions to his agent. The buyer’s agent would be paid by the seller’s agent, and all the commission money would actually come from the seller. The offer of commission was denoted on HAR.com so that the public and all realtors could see it and know how much it was. However, starting August 17, the MLS (for Houston, HAR.com) will no longer be allowed to display the offer of commission, so this field will be removed. Before showing any homes, the buyer’s agent will need to call the agents of all the homes the buyer wants to see, to verify if the seller will help the buyer pay for the buyer agent’s commission. It is highly anticipated that the seller will still offer a ‘buyer’s concession’ to help the buyer pay for his agent’s commission. They know that if they do not, the number of buyers that can see the home could be drastically limited, as many buyers barely have money for their down payment and can not afford to pay the buyer agent’s commission. It is important to note that if the seller says he will not offer a buyer’s concession, the buyer will then have to decide whether or not they still want to see the house. In the case where the seller will not offer a buyer’s concession to help the buyer pay for the buyer agent’s commission, and if the buyer does not have money to pay for the buyer’s agent’s commission, then that house would either not be shown or the Buyer Representation Agreement would have to be revised before it can be shown. Needless to say, the process to show houses to buyers will become a much more difficult and time consuming process, and could potentially cost the buyer a significantly higher cost if they have to pay their own realtor’s commissions. HAR.com has made these videos to help the illustrate the changes: https://cms.har.com/the-reality/.
Nearing the halfway mark for 2024, I have to say I don’t feel like the market has slowed at all. The last four listings I have put up, went under contract in single digit days and for very strong prices. Both our listing in Towne Lake as well as our listing in the Heights made it out of option last week. We are targeting a July 1 close date on both of those homes. In exciting news, we put up a listing in Clear Lake in the Bay Glen subdivision and found a buyer in the first few days, negotiated all repairs, and closed it in two weeks! Congratulations to one of our all star investors who decided to ride the seller wave and unload one of his rentals after his tenant moved out. A fourth victory was the closing of Baltic, also owned by one of our investors. This couple actually lives in Koh’s hometown in Japan and bought Baltic with a different real estate company. After being severely mismanaged, they Googled to find Annoura Realty and immediately engaged us in helping them turn their situation around. We were able to take over management, lease the home the home, stabilize the financials, then when the tenant moved out, got the house remodeled and put it on the market for sale. June 6, with Mariko at the helm, Texas Title helped us get Baltic closed with a remote online notary and a power of attorney for the Japanese sellers. Aside from these four active closings, we had two lease backs end. We bid farewell to the Iwata Family, who turned their home over to their buyers on June 12, then moved to Michigan. We also congratulated Robert Gondo who took possession of his golf course home on June 7th, and immediately started remodeling. I hear a wine wall will be going in to the formal dining room and I am excited to see how that turns out! Over on the leasing side of things, our Tokio Marine expat moved into his Galleria area highrise on the 14th and we welcomed a new Kuraray expat into his predecessor’s home on the 15th. Our two new Daikin expats will be moving into their new digs in a couple of weeks, and two new Mitsui expats have chosen their apartments and are now just waiting for their move in day to come! Coming up on the horizon, we have our next wave of expats, several are doctors at the Texas Medical Center, and newcomers from Nippon Steel, Benichu, and NOEX! As always, we greatly appreciate all of your referrals and are diligently tracking our lead sources. If you tell someone about us and they use us, please remind them to mention your name. We are working on some very special gifts to all our referral sources!
Where to start!? Team Annoura had an incredibly busy past 2 weeks with Susan and Mariko both traveling to DC for NAR’s Realtor Legislative Meetings. While there though, the work never stopped! Mariko was super busy helping many clients virtually. There are so many steps to help with when expats move to Houston. Finding the apartment or home is just one of many steps. It’s the after support that we take pride in- helping people apply, get qualified, sign their leases, set up their utilities, pay their balances. The to do list is always very long with each client. We ran into several new issues this week that don’t normally happen. For example, one new lease complex signed a lease with our expat client then told us they could not finish construction on time and needed to delay move in by one month! We fought back on behalf of our client and were able to negotiate a bigger unit for the same price. In another case, one apartment denied our expat’s application saying he could not qualify because of a lack of income.We were able to show an offer letter with a grant from Japan to prove he had enough income to qualify and to avoid their requirement of having a guarantor who made 5x the monthly rent. In a third unusal case, the apartment’s computer system had a problem and the our expat client’s application could not be processed! We were able to work through the problem and finally get his application pushed through manually. We still have 15 or so expats on the way to Houston and 7 waiting to move in. On the sale front, our Brookmall listing is set to close at the end of next week and we have two new listings that hit the market: One is a special home in Towne Lake and one is a condo on White Oak Dr. near downtown. The home in Towne Lake is a “multi-generation home” featuring TWO homes that would be perfect for a mother in law suite, or guest house. The White Oak condo would be perfect for anyone working downtown. Perhaps the most exciting closing since our last newsletter is the closing of Robert Gondo’s house! not only is the house itself absolutely drop dead gorgeous with stunning views of the golf course, even more awesome than that is the fact that it sits right next door to his mom and dad’s house. Surprise! I personally could not be happier for all of them, especially the parents, who I KNOW must be ecstatic. I know I would be!
Each new client has been telling us how they found us and usually it is a referral from a previous client. Because of this, we are planning our Referral Rewards Program soon! If you have referred a client to us, be sure they let us know. We are tracking where our new clients come from and we plan to give you a special gift to say thank you! Stay tuned!
What a whirlwind past two weeks! Since our last newsletter, several exciting things have happened. First off, we successfully closed on Maika and Tareek’s home after a small delay in the wire. Congratulations to this sweet family on closing while still in Japan! In other extremely exciting news, our favorite sushi supplier DID win his bid for the most perfect home in Royal Oaks. We are so incredibly excited to have made it through the option period and now have our eyes set on challenging the appraisal and making it to closing. On the horizon this week we have Peter’s Bay Oaks closing and Gaku’s Katy closing and have our fingers crossed for a smooth end game. All three sales involve lease backs, so we will close all three first and get keys at a later date. On the listing side, our star ballerina Charles found a buyer for Felt, and our Baltic listing is now in pending status as we wait for the appraisal to come in. The Iwatas perfected their home in Cinco Ranch Southwest and hired Susan to list it, and within single digit days, we are holding multiple offers. Highest and best is right now (Monday 7pm) and we should be under contract by tomorrow. On the leasing side of things, we had multiple move ins last week. Our newest Kaneka expat moved into our super popular Quiet Green listing and will stay under ARG property management. Our newest Mitsui expat moved into a beautiful apartment in the Galleria area and we were happy to help her even set up her rental furniture. KDDI’s newest expat went apartment hunting with Susan and found the perfect apartment with a Japanese style bath! The shower and bath are in the same glass enclosure and the view of his unit is awesome! Getting approved was a bit trickier than normal, but with some good teamwork, we got it done and he moved in last Friday. We had a repeat Daikin client who moved to a new place from his original place and kudos to our agent Mik Ebisu for getting the Oshimi Family across the finish line! Mariko closed on her Nippon Pillar client as well as her Daido Steel client and has a new Baylor College of Medicine doctor to tour this week. Meanwhile, Susan toured a new Tokio Marine expat and is working with a new Kansai Denryoku client and will meet the newest member of Nisseki Chemical this week.
We are so grateful for our past clients referring their colleagues and successors to Annoura Realty Group. We survive on word of mouth and do our very best to help all of our clients. Arigatou!!
