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Do Home Additions Make sense? 

Monday, May 20, 2024   /   by Matthew Lawson

Do Home Additions Make sense? 

Approximately one year ago today mortgage rates creeped above 4%, the first time consumers had seen rates starting with a 4 for over 3 years. Shortly thereafter rates hit 5%, and not long after that rates hit 6% where they have remained for nearly 9 months. Today, rates teeter right at the edge of 7%, a number the US hasn’t seen since the end of 2001, over 20 years. 

The age of the average home buyer today is 34. Home buyers today have never seen a mortgage rate this high in their adult lifetimes, and they don’t know what to do. Who can blame them when the average price of a home has risen nearly 30% in just 3 years?  Do you buy now and pray for rates to drop in the near future so you can refinance? Do you wait out the market for rates to drop, only to undoubtedly be back competing for any home that hits the market? 

Unfortunately, that doesn’t really matter much if there’s no homes available for you to purchase. 

When rates dropped down into the 2’s buyers and sellers rejoiced at their opportunities to buy and sell. Buyers weren’t as happy thanks to the increased competition due to lack of inventory, but all the same once you got the house you weren’t complaining about the rate. I myself cursed the lack of homes on the market, but I always encouraged my buyers forward if they were able. Unfortunately, like many other Realtors in the Charlotte region many of our buyers opted to rent to wait for the market to “cool”. Now those buyers are asking  “Now what?”

With Rates at a 20-year high home buyers are trying to make sense of their next move. Do they postpone buying for another year and hope rates are better? Do they buy now and refi? Do they negotiate a rate buydown with a seller? None of that matters if there’s no inventory. 

In the past I’ve discussed listing ratios month over month and how this impacts the number of days homes stay on the market. From January – March the average days on market of a home in Waxhaw was over 17 days, up nearly 2 weeks from the same time last year. Rates have risen twice since March, so it would be expected so has days on market right? Wrong. 

Instead of homes lasting on the market longer, the days on market took a steep dive in April down to only 5 DAYS!  Since 2020 Waxhaw has been a hotspot and the number of listings has continued to dwindle. Usually around April every year we start to see the number of listings increase as sellers prepare for the summer market. Unfortunately this year our listing can’t hasn’t budged since January, in fact it’s gone down. Why is this? 

Sellers hands are tied. Just about anyone with a mortgage refinanced or purchased from 2020 – 2022 and are sitting on 2-3% interest rates. When rates double, sellers can’t make sense of losing their rate even if they want to move. That extra bathroom or bedroom doesn’t mean a whole lot if you have to double your payment to get it, so sellers would rather stay put. Leaving buyers to fight over the table scraps that do come to market, and they’re fighting tough. 

With inventory down to another historic low buyers are learning they still have to find a way to move forward if they want a home. As tough as it is, this isn’t going to get much better in the next few months until rates begin to fall. Even then, we don’t know how long that’s going to take and to what point they’ll actually get to. 

Buyers, rates don’t look like they’re going to get much better for a while, and despite what the news is telling you, homes are still appreciating. If values continue to rise and rates do drop I’d much rather be in a home and refinance, than be back in a competitive market like we were in 2020 – 2021. Competition is lower right now and opportunities are available, there just may not be as many as we’d like. 

Sellers, buyers are searching and ready to buy if you’re ready to sell. Check with your lenders to see if your mortgage is assumable to give you more options when selling. Know that even with a little lower inventory your home still needs to be priced correctly. A small overpricing and your home can end up sitting for weeks as buyers have become very sensitive to overpaying. 

I am always happy to discuss your options and help you, as a buyer or seller, in any way that I can. I can be reached at 980-250-2795 or Matt@briggsamerican.com

Briggs American Homes at Real Broker, LLC
Matthew Lawson
5960 Fairview Rd Ste 400
Charlotte, NC 28210

Based on information submitted to the MLS GRID as of 6/13/2024 4:40 PM CST. All data is obtained from various sources and may not have been verified by broker of MLS GRID. Supplied Open House Information is subject to change without notice. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information. Some listings have been excluded from this website.
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