Key Takeaways:
– Rising mortgage rates have overtaken lack of housing inventory as the top concern for real estate agents
– Approximately one-third of agents and brokerage executives believe high mortgage rates are the biggest concern in the housing market
– Mortgage rates have fallen significantly in November, which is seen as a morale booster for real estate professionals
– Mortgage originators rank lack of home inventory as their top concern, while brokers and bankers focus on homes coming on the market
– Many potential homebuyers indicate that high interest rates are a factor in their decision not to buy, and they would require a significant rate decrease to move forward
– Real estate agents and loan originators are cautiously optimistic about the future, with expectations of a heavier borrower pipeline in the next 12 months.
inman:
After exceeding 8 percent in October, rising mortgage rates overtook “lack of housing inventory” as the top concern for real estate agents, according to the results of the latest monthly Inman Intel Index.
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Approximately one-third of agents and the brokerage executives who lead them believe high mortgage rates are the biggest for concern in the housing market today, surpassing low inventory and fallout from commission lawsuits such as Sitzer | Burnett, according to the results of October’s Inman Intel Index survey, released last week.
After exceeding 8 percent in October, rising mortgage rates overtook “lack of housing inventory” as agents’ top fear after ranking second in the same survey a month earlier. The findings are among hundreds gleaned from the Inman Intel Index, or Triple I, which was conducted Oct. 23-31 and drew 1,269 responses. The 168-page report is available exclusively to Inman Intel subscribers and includes a comprehensive breakdown of all survey responses.
This month’s Inman Intel Index survey is open now.
“I think that homebuyers and real estate agents understand well that the 3 percent mortgage rate is a historic abnormality and is not the norm,” Gay Cororaton, chief economist for the Miami Association of Realtors, told Inman by email. “But the current rate of 8 percent is also not normal, and I expect rates to go further down in 2024.”
Mortgage rates have fallen significantly in November, with the average 30-year fixed mortgage closer to 7 percent than it has been in two months. For homebuyers and sellers, the benefit is clear, but after more than a year of rates in excess of 6 percent, the decline in rates is also a huge morale booster for real estate professionals, according to the survey results.
Only one group surveyed in the Triple-I didn’t rank interest rates as their top business concern in October. Mortgage originators, who did rank them first in September, put them second behind lack of home inventory. With refinance activity down severely, it stands to reason that brokers and bankers are focused on homes coming on the market.
To track industry sentiment, the Triple-I polls real estate agents, loan originators, brokers, industry executives and proptech leaders monthly. November’s survey opened today and can be accessed here.
No one gets a bite at the apple, though, until someone decides to buy a home, and elevated interest rates continue to factor heavily into the homebuying equation for many Americans. A new consumer survey undertaken by Inman, in partnership with Dig Insights, surveyed 3,000 potential homebuyers and found that many need to see a far more dramatic rate drop to move forward.
More than 2 out of 3 Americans surveyed by Dig Insights indicated they were unlikely to buy in the next 12 months, and 35 percent of those said that high interest rates were a factor in their decision. Asked how much mortgage rates would need to decrease for them to become likely to buy, one-third chose “More than 2 percent.”
According to an Inman Intel analysis last month, a mortgage payment that would have been close to $1,175 four years ago now comes to over $2,600 a month. That’s a problem for a lot of homebuyers, first-timers or not.
“With mortgage rates still expected to be elevated at over 5 percent, there’s naturally a higher financial hurdle for existing homeowners to move,” wrote Cororaton, a former senior economist and the director of housing and commercial research at the Research Group of the National Association of Realtors.
With a potential ceiling on rates, real estate agents and loan originators are looking toward 2024 with cautious optimism. While nearly 70 percent of agents indicated their buyer pipeline was either lighter or substantially lighter than it was 12 months ago, less than 30 percent felt that would be the case one year from now. Over one-quarter of them responded “Heavier,” while just under 44 percent said they expected it to be about the same.
Mortgage originators were even more optimistic, with over 37 percent expecting a heavier borrower pipeline in 12 months.
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Property Chomp's Take:
In a recent survey conducted by the Inman Intel Index, rising mortgage rates have emerged as the top concern for real estate agents, surpassing the lack of housing inventory. After reaching over 8 percent in October, mortgage rates have become agents' biggest fear in the housing market.
Approximately one-third of agents and brokerage executives believe that high mortgage rates are the most significant concern in today's housing market. This surpasses other issues such as low inventory and fallout from commission lawsuits. The survey, which received 1,269 responses, revealed the changing sentiment among industry professionals.
The October survey results indicate a shift in agents' priorities, as rising mortgage rates overtook the lack of housing inventory as their top concern. This change is significant, considering that mortgage rates ranked second in the same survey just a month earlier. The Inman Intel Index provides a comprehensive breakdown of all survey responses and is exclusively available to Inman Intel subscribers.
The chief economist for the Miami Association of Realtors, Gay Cororaton, shared her insights on the matter. She stated that while the current 8 percent mortgage rate is not normal, she expects rates to decrease further in 2024. Cororaton emphasized that both homebuyers and real estate agents understand that the 3 percent mortgage rate was a historic abnormality and not the norm.
The decline in mortgage rates in November has been significant, with the average 30-year fixed mortgage rate falling closer to 7 percent. This decline is beneficial for both homebuyers and sellers. For real estate professionals, it also serves as a morale booster after more than a year of rates exceeding 6 percent.
Interestingly, the Triple-I survey revealed that only one group did not rank interest rates as their top concern in October. Mortgage originators, who ranked interest rates first in September, placed them second behind the lack of home inventory. This suggests that brokers and bankers are currently focused on homes entering the market rather than interest rates.
The Triple-I tracks industry sentiment by polling real estate agents, loan originators, brokers, industry executives, and proptech leaders monthly. The November survey is now open for responses.
However, the survey results also highlight that interest rates continue to play a significant role in the homebuying decision for many Americans. A consumer survey conducted by Inman in partnership with Dig Insights found that many potential homebuyers need to see a more significant drop in rates to move forward. Over 2 out of 3 Americans surveyed indicated that they were unlikely to buy in the next 12 months, with 35 percent attributing their decision to high interest rates.
According to an Inman Intel analysis last month, a mortgage payment that would have been close to $1,175 four years ago now amounts to over $2,600 a month. This increase poses a challenge for many homebuyers, especially first-timers.
Despite the current challenges, real estate agents and loan originators are cautiously optimistic about the future. While nearly 70 percent of agents reported a lighter buyer pipeline compared to 12 months ago, less than 30 percent expect that to be the case in one year. Mortgage originators are even more optimistic, with over 37 percent anticipating a heavier borrower pipeline in 12 months.
In conclusion, rising mortgage rates have become the primary concern for real estate agents in today's housing market. The October survey results highlight the shifting priorities among industry professionals, with mortgage rates surpassing the lack of housing inventory. Although rates have fallen in November, they continue to impact the homebuying decisions of many Americans. However, there remains cautious optimism for the future as agents and mortgage originators anticipate a stronger market in the coming year.
