I Spy Something Suspicious

The day everyone waited for finally arrived and we're all a little suspicious. If you missed it, the Federal Reserve lowered interest rates for the first time in years by half a percentage point (CNBC) in mid September. What does this mean exactly? It's complicated, but overall it means the national borrowing rate of money reduced slightly. However, the aftermath of this change hasn't caused much rippling effects. As of right now, the job market and inflation haven't truly budged since the rate cut (CNBC) with Treasury yields and mortgage rates trending up rater than down. In fact, current 30 year mortgage rates continue to hover at 6.20% (MortgageNewsDaily). Month over Month market report numbers also show most NOVA counties holding steady with new listings and pending sales showing little to no change. According to the New York Times, this recent rate cut is considered to be an economic no-brainer in the larger picture of the Fed's continued efforts to stabilize the economy with suggestions of rates continuing to be lowered later in the year. 

For now, the Holiday season is truly upon us, and with it being an election year, it's uncertain if the Federal Reserve will make any more changes. If they do, it remains to be seen if mortgage rates will trend down. Of course, Fine Nest will be here evert step of the way to bring you the latest report.

 
This Month's Featured Tea Flavor: Spicy NAR Settlement Latte

Back in April, Fine Nest covered the breaking news of the NAR Settlement that rattled the real estate world. To recap, the biggest expected change was that compensation offers would no longer be detailed in the MLS, but would rather remain within contracts. For those unfamiliar, the MLS stands for Multiple Listing Service which is the internal database agents access to search for and/or list properties for sale and/or rent. This database not only shows which properties are on the market, but provides in depth details about properties and brokerage details that aren't publicly available on popular listing sites like Zillow.com, Realtor.com, etc.
  Since the settlement, the anticipated changes began August 17th and the tea around these changes was quickly spilled. Most notably, a frenzy of questions has been pouring in, and Fine Nest is here to help answer the big ones.

(1) Who's affected by these changes? Simply put, everyone from agents to home owners to buyers. As one of the largest changes to real estate in many years, the previous norms to buying and selling are officially over.

(2) What are biggest changes to compensations? With the help of CNN, the biggest changes are:
- Seller compensation offers to buyer agents can no longer be listed in the MLS.
- Buyers must now sign legally binding Buyer Broker Agreements before being shown any properties.

(3) What do these changes mean for buyers? The largest difference is that for sellers who negotiate to only pay their listing agent's compensation on the sale of their home, buyers may now be responsible for covering the compensation of their buyer agents should a seller decline to cover the buyer agents compensation.

(4) What do these changes mean for sellers? While compensation has always been negotiable, the settlement brought complete transparency to compensation. Sellers now have the power to offer as much or as little compensation as they'd like in the sale of their property. This includes either including or excluding compensation for buyer agents, which may or may not affect the sale of their home.

(5) Are there other ways to negotiate seller coverage of a buyer agents compensation? Yes! Your agent can still negotiate their compensation be covered by the seller, just not through the seller's broker. The alternatives include speaking to a knowledgeable lender, requesting seller subsidy for the buyer to pay compensation to their agent and strategizing around the present market demands.

(6) Will the change affect renters? According to TurboTenant, while the core aspects of rental agreements are not greatly affected by the NAR settlement, renters may be obligated to sign representation agreements with their agents before seeing properties.

The true aftermath of these NAR changes will certainly take time to play out. However, it's the agents who have taken the time to prepare for and understand what's new that are likely to carry us through this change. From understanding contract changes to easing client worries, it's these kinds of industry challenges that reveal how invaluable seasoned agents are to providing their clients with important information surrounding the new nuances of purchasing or selling a property. Most notably, sellers cannot sell without a sufficient pool of buyers. So, strategizing the sale of a home is now more important than ever. Just because compensation is entering a new grey area, doesn't mean all is lost in the market of supply and demand. Here at Fine Nest, we've diligently prepared to tackle these NAR changes and know we are the best people to represent you and your values as homeowners and/or aspiring homeowners.

Finally, as we greet the seasons change, current 30-year mortgage rates are lingering at 6.43% (MortgageNewsDaily). With the Federal Reserve still anticipated to make a September rate cut, stay tuned for next months newsletter to see how everything plays out.

A Look into 2024's Spring/Summer Market Numbers Before Heading into Fall

With the 2024 summer real estate market heading into its final month before the fall/winter seasonal slow down, we thought we'd touch base on where the busy season has brought us thus far with the help of the National Association of Realtors. To recap, March is typically when the busy season really takes off. This year, March was looking at interest rates in the 7th percentile, low inventory, and a median home price of $434,000. These numbers came after a winter that saw the fist 8% mortgage interest rates since the mid 2000's (CNBC), and continual insufficient inventory to meet market demand. Fast forward to now and home prices are still higher YOY, having increased 6.4% for a median home price of $426.900. The biggest change from last year, however, is inventory increase. So much so that new construction has sufficiently filled in some gaps throughout the DMV area (for more details, read Fine Nest's May Newsletter).

Despite higher inventory, this increase has come at a cost. Stated in a Reuters article, home financing options with ever increasing home values depressed home sales beginning in June. In other words, many homebuyers are officially forced to wait for something to change before they continue their home buying dreams. For the finance sector, this slow down only adds fuel to the recent fire of potential interest rate cuts by the Federal Reserve. According to PBS News, price pressures steadily cooling the economy point to a September rate cut being more possible. The anticipation of it all even has 30 year mortgage interest rates hovering at 6.4% (Mortgage News Daily), the lowest level in the last six months!

Finally, August 17th marks the first day of new NAR changes going into effect since the March settlement that shook the real estate world. If you've been out of the loop, check out our April Newsletter to know what is soon to come. For now, keep an eye out for our September newsletter where we will cover how these changes play out. As a bonus, from our fearless eXp Realty CEO, check out Leo Pareja's livestream setting the record straight on this topic.

If the Real Estate Market Could get its Fortune Told

Market predictions are always something Fine Nest takes with a grain of salt. They're not always wrong, but like fortune tellers, there's a lot of guess work thrown into these predictions that ultimately discredit them. This time though, the years long journey of high interest rates and rising home prices has officially landed our market in "bizarro world". According to Business Insider, the foundational real estate principal of supply and demand is being tested as we speak with supply for homes rising, demand falling, and the kicker, home prices are still on the rise. 5.7% YOY to be exact. On the flip side, this supply and demand phenomenon is affecting the nation more regionally than wide spread. Zooming into the DMV area, we are seeing home prices on the uptrend, but the number of days listings remain on market are within peak season demand expectations.

As far as predictions go, stated in a CNN article, this current standstill of higher rates and higher home prices may not fluctuate in any significant degree until 2026. However, there are variables to consider such as 2024 being an election year, and election years typically don't see major fluctuations to the real estate market (barring any pandemics, of course). Further, any interest rate cuts made by the Federal Reserve will invariably affect real estate mortgage interest rates. Mentioned by Reuters, the nations strong holding economy with joblessness claims continuing to fall does support a potential interest rate reduction that is now, allegedly, going to happen in September of this year. For now, mortgage interest rates continue to hold in the seventh percentile at 7.14% (MortgageNewsDaily).

Welcome Back to another Monthly *Slightly* Different Real Estate Market Report

We know monthly market reports have been a bit repetitive to say the least. The seemingly never ending news of "30 year mortgage interest rates remain high" (7.17% to be exact (MortgageNewsDaily)) and "the Fed changed its mind on rate cuts, once again" have dominated most headlines. This past month, however, inventory has seen its first significant uptick compared to the last couple years with CNBC reporting YOY inventory for April up 16%! Although this inventory boost is only enough for a 3-5 month national supply, it's still a great sign that the summer market will likely provide buyers with more options, and more opportunities for negotiated contingencies like home inspections and appraisals. Speaking of options, continued demand for financial aid recently expanded to homeowners with Freddie Mac proposing to buy home equity loans. According to The Hill, if Freddie Mac approves of this move, it could boost refinancing loans to qualifying borrowers, as well as, include more favorable terms than private credit markets can offer. So, as the tree trunk of a real estate market holds relatively steady, the borrowing branches of homeownership are more and more bending to the wind of demand.