April Real Estate Roundup: Spring Market Check: “Balanced” vs. “Booming”

April is Financial Literacy Month, a great chance to remind clients about the importance of understanding and managing their money – especially when preparing to buy a home!

Whether your buyers are first-timers, move-up, or investors, understanding concepts like credit, budgeting, and savings is vital for everyone. I have materials for all of these topics (and more!), plus workshops we can host together on credit or financial awareness for beginners. Just let me know!

Now, let’s dig into the latest updates…

The Market Isn’t Tough, It’s Transitioning

Rates have been higher than we hoped for the spring market, but consider Scotsman Guide’s latest take:

• Buyers are still enjoying a more favorable landscape than a year ago.

• Active listings have been climbing for over two years, reaching 964,477 in March. For a state-by-state look, check out Resiclub’s April analysis.

• New listings also saw a significant seasonal jump, rising 21.2% from February to 439,000, surpassing the historical seasonal norm of an 18% increase.

In other words, it’s very much a buyer’s market right now – we just need to reframe expectations.

• Rates aren’t dropping dramatically, so stop waiting. Mortgage rates are hovering around 6–6.5% and expected to stay there.

• Buyers are highly rate-sensitive – but still active when we help them adjust expectations.

• Educate clients on “date the rate, marry the house.”

• Push payment-focused conversations, not rate-focused.

Float Down Options

Rates have fluctuated a lot this spring. For buyers worried rates might go down after they’ve locked in, a float down gives them a one-time option (if rates drop before closing) to lower (or “float down”) their interest rate during the lock period, up to .25% depending on market conditions.

For example, at current pricing, if we quote a rate of 6.625%, but the borrower really wants 6.375%, a buydown would cost them 1% of the loan amount. With a float down, they 6.625% and pay .5% of the loan amount upfront. If rates improve* within 15 days of closing, they snag the lower rate.

The loan (conventional, FHA, or USDA only) must be in process with a signed purchase contract. There’s a small upfront fee, but it’s refunded if the loan doesn’t close or if the buyer chooses not to use the float down. I’m happy to run more sample numbers for you!

Be the Go-to Guide for First-Time Buyers

First-time buyers are struggling to enter the market right now, but it’s due to lack of affordability, not lack of interest. They’re looking for guidance, so focus on:

• Fully underwritten pre-approvals** vs. just pre-qualification

• Clear expectations around needs vs. wants

• Education on down payment assistance and grants

• Openness to condos, townhomes, fixer-uppers, and other non-traditional starter (not forever!) homes.

Finally, that renting quagmire. Renting might be cheaper the first year or two, but appreciation and tax benefits almost certainly make homeownership the better long-term option. I’m happy to run a detailed rent vs. own breakdown for your clients for their specific neighborhood.

And if your first-timers are fortunate enough to have a tax refund…

Using Tax Refunds for Homeownership

By now, hopefully some of your clients are getting tax refunds, and even small amounts can go a long way toward homeownership. Along with advice from their tax professional, here are some tips to share: 

• Use for/add to a down payment: Lower the amount borrowed and lessen/eliminate mortgage insurance.

• Cover closing costs: Earnest money deposit, home inspection, appraisal or other out-of-pocket costs. (A closing cost worksheet is also helpful.)

• Pay down debt: Pay off high interest loans like credit cards to help lower the debt-to-income ratio and improve credit scores.

• Buy discount points/float down: Use a refund toward a lower rate.

• Cover moving costs: Box trucks and packing materials can add up!

• Build an emergency fund: Start an account to cover future home maintenance.

I’m excited about where we’re heading, and I look forward to collaborating – let’s connect!

*Program terms, conditions, and eligibility requirements apply. Offer valid on home purchase loan applications completed with Atlantic Bay Mortgage Group, L.L.C. Promotion valid on applications received by December 1, 2023. Maximum rate reduction of .25% based on market conditions at the time the float down is exercised. Up-front float down fee of 0.25% of loan amount if the interest rate has *improved by 0.125 is required upon borrower’s intent to proceed. Up-front float down fee of 0.50% of loan amount if the interest rate has improved by *0.25 is required upon borrower’s intent to proceed. Fee will be credited back in the event the loan does not close or the borrower does not exercise a float down prior to closing. Float down may only be utilized one time up to 15 days prior to closing. Offer date subject to change at any time. Information deemed reliable but not guaranteed. Other loan program restrictions may apply. Loan programs, interest rates, and fees are subject to change without notice. All loans subject to income verification, credit approval and property appraisal. Not a commitment to lend. Atlantic Bay Mortgage Group, L.L.C. NMLS #72043 (nmlsconsumeraccess.org) is an Equal Opportunity Lender. Located at 600 Lynnhaven Parkway Suite 100 Virginia Beach, VA 23452.

**A pre-approval is not a guarantee of a final loan approval. Any material change to credit worthiness, employment status, or financial position may impact final loan approval. All loans subject to satisfactory appraisal, clear property title, and final credit approval.