ST. LOUIS — If you are in the market to buy a home, there's a chance you might be able to do it with some normalcy. There are early signs the real estate market could be shifting. Here's what we learned from Kathy Helbig-Strick, the owner of Experience Realty Partners.
"Let's say this time last year, we might have had 30 offers on a property," said Helbig-Strick. "Now we might have six. So it's still not a bad position to be in as a seller, but you have less options as you get less buyers that are throwing their hat into the ring."
Here are some of her signs that the housing market could be taking a turn:
1. Homes are selling fast, but they're not selling as fast. "Two weeks ago we had two houses that did not sell the first week, and so we're like, 'Oh, the sky is falling,"' said Helbig-Strick. "It sold in seven days instead of two, but that's the reality. That was unusual."
2. Fewer people are getting pre-approval loans. According to the Mortgage Bankers Association, the applications for new loans were down 7% from the prior week and 21% year over year, said Helbig-Strick. That tells her that buyers have pulled back, though one also has to consider there are fewer houses available as well. "So you have to put those together," said Helbig-Strick. Buyers may be sidelined because of the financial crisis, but there is still little inventory.
3. More sellers appear to be reducing their list price. This could be an indicator that now sellers have started pricing too high and need to get it back into perspective. "I went back and looked at how many active listings we had [in the St. Louis metropolitan area] during a week period versus the price reductions that happened," said Helbig-Strick. "We had about 450 existing listings and about 230 price reductions in that same week." She said it's not going to set off alarms, but it can be an indicator that there might be a shift.
4. More terms are creeping back into contracts. Remember the days when buyers were waiving important terms like an inspection or an appraisal? Helbig-Strick said she's starting to see those make it through contracts in the last few weeks.
5. Hedge funds or institutional buyers are pausing buying in communities as rates rise again. This is a hot tip from Helbig-Strick who often works with hedge funds that try to buy 50 homes a month to hold and rent in the St. Louis community. The companies that work with EXP said they're holding off as they watch the next round of securitization.
Ultimately, Helbig-Strick said it's still a hot market, but there are beginning signs that there is some normalization again. She said it's still very hard for people to find homes in the $150,000 to $400,000 range, which typically are considered the range for first-time homebuyers.