Continued fairly robust activity, the market opening up for buyers, mortgage industry in more turmoil, jumbo lenders (above $510,400) exiting the market and more updates…
Because real estate has been deemed an essential business, sellers with an urgent desire to sell now instead of waiting and buyers who have chosen to stay in the market are still at it. In the 7-county inner-metro area, pended sales were just under 700 last week, down only 26% compared to the same week one year ago. That seems like a pretty fair level of activity given we are under “stay at home” orders, but there’s been a definite slow-down at this point.
Good news for those buyers: according to MN Transaction Coordinators, a firm that many area agents use to handle paperwork and transaction management, 64% of offers written in March were accepted. That’s up from just 34% in March 2019. Their data supports what I’m hearing anecdotally as well–evidence that competition for homes is much less intense than it was pre-covid. What’s more, interest rates for conventional loans (below $510,400) have stabilized for the most part into the low- to mid-3%s.
The bad news is, as lenders and mortgage-backed security investors fear potentially gruesome liquidity issues due to government forbearance directives and potential foreclosures caused by huge spikes in unemployment, it’s getting harder to get pre-approved. Updates this week to minimum credit scores and other metrics for issuing pre-approvals, as determined by the industry-standard desk-top underwriting software, has most certainly caused some pre-approved buyers to have their letters pulled. Further, entities issuing jumbo loans, with the exception of most of the largest national banks, have pulled out of the market for the time being.
For buyers who have been looking for some time and had a run of bad luck, now might be an opportune time to try and lock up a house. Same for move-up buyers very secure with their employment, although the jumbo loan volatility could make the process a little bumpy (but less so for buyers able to put 25% down and/or with an established portfolio, ideally with one of the big banks. A word of caution to those buyers who may feel like they suddenly have the upper-hand: inventory levels and the current pace of contracts coming together still result in metrics that show the market still favors sellers.