Brokers see indicators of housing market slowing down

Brokers and buyers see indicators of a market leveling off after pandemic frenzy caused bidding wars and high demand
7:24 | 08/12/22

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Transcript for Brokers see indicators of housing market slowing down
SO IS NOW THE TIME TO BUY? HERE'S AB'S ALEX PRESHA. >> Reporter: GAS PRICES, INCREASING FOOD COSTS, RISING INFLATION HAVE BEEN MAJOR CONCERNS FOR CONSUMERS THIS SUMMER. AS SPECULATION ABOUT AN UPCOMING RECESSION IS MAKING AMERICANS NERVOUS. BUT PERHAPS SOME RELIEF FOR THOSE LOOKING TO BUY A HOME. A FEW MONTHS AGO, IT WAS THE TIME OF THE SELLER. >> THIS MORNING, BIDDING WARS FOR HOMES POPPING UP ACROSS THE COUNTRY. HOME LISTINGS DOWN 37% VERSUS LAST YEAR. THE AMOUNT OF POTENTIAL BUYERS UP 53%. >> MY HOUSE LITERALLY SOLD IN 48 HOURS. >> Reporter: THE PANDEMIC WAS DRIVING INTEREST RATES DOWN, WHILE INCREASING DEMAND. BUYERS STRIPPED OF ALL NEGOTIATING POWER, HAVING TO REMOVE CONTINGENCIES, SPENT MORE TO LAND A HOME OF THEIR DREAMS. BROKERS AND EXPERTS ARE SAYING THE MARKET IS SHIFTING ACROSS THE COUNTRY ALONG ALL PRICE POINTS. TONIGHT, FROM THE WEST COAST -- >> DEMAND'S DOWN SIGNIFICANTLY. WE FEEL IT. >> Reporter: TO THE EAST COAST -- >> THINGS HAVE STARTED TO SLOW DOWN. >> Reporter: WE'RE WITH BROKERS AND BUYERS AS THEY NAVIGATE THE CHANGING LANDSCAPE. >> HAVE YOU EVER HAD TO APPROACH BUYING A HOME LIKE THIS? >> NOT WITH THIS MUCH PRESSURE. >> PEOPLE WOULD ESSENTIALLY PAY WHATEVER IT TOOK TO GET THE PROPERTY THAT THEY WANTED. NOW WE'RE SEEING REASON KIND OF THROWBACK INTO THE BUYERS' MINDSETS. THEY'RE BECOMING A LITTLE BIT MORE PICKY. >> Reporter: GEO AND JUSTIN ARE REALTORS IN ORANGE COUNTY, CALIFORNIA, WHERE DEMAND FOR LUXURY REAL ESTATE LIKE THIS HOME IS HIGH. >> THIS IS NOT A STARTER HOME. >> NO. >> YOU'VE GRADUATED, ALEX. >> Reporter: THEY PLAN TO LIST IT FOR $7 MILLION TO $7.5 MILLION. >> DATED COMMUNITY. 68 HOMES. ULTRA-EXCLUSIVE. AS YOU CAN SEE, THIS HOUSE IS ALL ABOUT THE VIEWS. YOU HAVE YOUR PRIVATE BEACH HERE. PRIVATE BOAT SLIP THAT CAN HOLD UP TO A 35-FOOT BOAT. >> Reporter: ORANGE COUNTY REAL ESTATE IS SUCH A HOT MARKET THAT NETFLIX CHOSE IT AS THE LATEST SPIN-OFF LOCATION FOR THEIR HIT REALITY SERIES "SELLING SUNSET." >> OPPENHEIM GROUP HAS HAD SO MUCH SUCCESS IN L.A. THAT WE'RE OPENING UP A SECOND OFFICE IN ORANGE COUNTY. >> Reporter: GEO AND JUSTIN ARE TWO OF THE STARS OF "SELLING THE O.C." >> I AM THE TOP DOG HERE AT THE OPPENHEIM GROUP. >> Reporter: SIGNS OF A SLOWDOWN STARTED APPEARING IN APRIL. WHILE OTHER CITIES LIKE OAKLAND, SACRAMENTO, AND A SAN JOSE ARE EXPERIENCING COOLING MARKETS WHERE SELLERS AREN'T ABLE TO GET HIGHER PRICES, THE DUO DESCRIBES THE O.C. REGION AS A BALANCED BACK TO NORMAL. >> MORE AND MORE INVENTORY COMES ON THE MARKET, AND DEMAND IS DOWN. BUYERS HAVE MORE TO CHOOSE FROM, THEY CAN BE MORE SELECTIVE. >> I THINK THAT'S A GOOD THING, FRANKLY. I DON'T LIKE WHEN ONE SIDE HAS ALL THE POWER. >> WHAT ARE BUYERS INSISTING ON NOW THAT THEY MIGHT NOT HAVE A YEAR AGO? >> NEGOTIATION POWER. A YEAR AGO IT WAS, IF YOU DIDN'T OFFER LIST PRICE OR 5% TO 10% ABOVE, CHANCES OF GETTING THE PROPERTY WERE ZERO TO NONE. THEY CAN NOW SUBMIT OFFERS UNDER LIST PRICE, NEGOTIATE. IT'S GIVEN THE BUYER A LITTLE BIT MORE TIME, A LITTLE MORE POWER WITH THE PRICE. >> Reporter: AT THE SAME TIME, BORROWING HAS BECOME MORE EXPENSIVE. >> ONE ELEMENT THAT IS AFFECTING THE HOUSING MARKET FROM STARTER HOMES ALL THE WAY UP TO LUXURY HOMES AND BACK, IS THE FED RAISING RATES. THE BEGINNING OF THIS YEAR, YOU COULD FIND A 30-YEAR FIXED MORTGAGE FOR LESS THAN 4%. THIS MONTH, THE AVERAGE IS AROUND 6%. >> WE DID FEEL A VERY AGGRESSIVE SLOWDOWN. DURING OPEN HOUSES, WHERE'S ALL THE BUYERS? SO THAT LITTLE PERIOD OF TIME WHEN INTEREST RATES DID GO UP 2% TO 3% A COUPLE OF MONTHS AGO -- >> ALMOST OVERNIGHT. >> OVERNIGHT, IT DID SWITCH. LISTING AGENTS FELT THE DIFFERENCE. >> Reporter: BUT THE BROKERS SAY THEY'RE NOT NECESSARILY LOSING SLEEP OR COMMISSIONS. >> THERE ARE ONLY SO MANY WATERFRONT HOMES. YOU CAN'T GO MAKE MORE OF THEM. SO I THINK PEOPLE ARE WILLING TO DISH OUT THAT LITTLE EXTRA PREMIUM TO ENJOY ALL THE BENEFITS OF A VIEW LIKE THIS. >> HOW ARE YOU? GOOD TO SEE YOU. >> HEY, GEO, HOW ARE YOU? >> Reporter: THOSE BEACHES WERE SO APPEALING TO DEMI AND TIM SHERMAN, THEY CAME TO CALIFORNIA TO LOOK AT HOMES WHILE PUTTING THEIR HOME IN DALLAS ON THE MARKET. THE COUPLE HAD MOVED NINE TIMES BEFORE BUT SAY THE PRESSURE HAS NEVER BEEN SO HIGH. >> WE'VE ACTUALLY DONE ONE HOUSE-HUNTING TRIP AND OFFERED ON TWO HOMES THAT WE LOST. WE PUT AN OFFER IN ANOTHER HOUSE HERE IN HUNTINGTON BEACH, BUT THERE WERE I THINK 15 TO 20 ORIGINAL OFFERS. FOUR OR FIVE ROUND COUNTER PROCESS. WE EVENTUALLY ENDED UP PULLING OUT OF THAT. >> Reporter: THEY SAY A BIDDING WAR ENSUED WITH THE HOUSE GOING 15% OVER ASKING, PROMPTING THE COUPLE TO CONSIDER LIQUIDATING INVESTMENTS TO COMPETE. >> IT WAS A LOT OF RISK. IT WASN'T MAKING SENSE ON PAPER. >> Reporter: THEY FLEW BACK TO DALLAS, EMPTY-HANDED AND NERVOUS. THEN INTEREST RATES STARTED INCREASING. >> AFTER WE, YOU KNOW, WENT BACK TO TEXAS, GEO HAD CALLED US AND SAID, HEY, THIS OTHER HOME CAME BACK ON THE MARKET IF YOU WANT IT, YOU NEED TO MAKE AN OFFER, BEING REMOTE, YOU NEED TO MAKE AN OFFER. SO THAT'S KIND OF WHAT WE DID. >> BUYING BASED OFF OF PICTURES HAS GOT TO MAKE YOU FEEL NERVOUS, RIGHT? >> RIGHT. >> WHAT WAS THE FIRST SIGN THAT THE MARKET WAS COOLING? >> WHEN THE FEDS RAISED THEIR INTEREST RATES. IT STARTED COOLING OFF. EVEN FRIENDS BACK IN DALLAS, THEY PUT THEIR HOUSE ON THE MARKET TWO OR THREE WEEKS AFTER US. AND IT'S STILL ON THE MARKET. >> Reporter: HER FRIENDS AREN'T ALONE. ACCORDING TO A REDFIN REPORT RELEASED THIS WEEK, MANY MARKETS, INCLUDING DALLAS, ARE "STALE" WITH MORE AND MORE HOMES LISTED AT LEAST 30 DAYS WITHOUT GOING UNDER CONTRACT. NEWARK, NEW JERSEY, IS ANOTHER AREA SEEING AN INCREASE OF HOMES ON THE MARKET FOR LONGER. >> THAT'S THE PROCESS. THAT'S THE WAY IT SHOULD BE. >> Reporter: ASIA WHITE IS A REAL ESTATE AGENT SERVING MIDDLE TO HIGH-INCOME NEIGHBORHOODS AND IS GLAD IT'S SLOWING DOWN. >> LAST YEAR WAS LIKE NO OTHER, I DON'T KNOW IF WE'LL SEE THAT AGAIN ANY TIME SOON. >> Reporter: SHE ENCOURAGES FIRST-TIME BUYERS TO LOOK. >> THE FIRST-TIME HOME BUYER'S MARKET IS A HUGE MARKET. IF YOU'RE IN A FINANCIAL SPACE WHERE YOU CAN AFFORD TO BUY A HOME BUT YOU'RE WORRIED ABOUT THE RECESSION, I SAY, SPEAK TO A LENDER, FIND OUT WHAT YOUR OPTIONS ARE, DON'T JUST COUNT YOURSELF OUT. A LOT OF TIMES YOU'RE FAILING YOURSELF ON THE TEST AND YOU HAVEN'T EVEN TAKEN IT. >> Reporter: ONE OF THE MOST DIFFICULT PARTS IS KNOWING HOW TO PRESENT THE BEST OFFER IF YOU CAN'T SPEND AS MUCH. >> IF YOU PUT DOWN 10%, IT'S STILL A STRONG OFFER. IF YOU SAY, I WANT TO CLOSE IN 45 DAYS, I LIMIT MY INSPECTIONS -- THERE ARE OTHER THINGS THAT MAKE YOUR OFFER STRONGER. >> Reporter: IN THE AGE-OLD QUESTION, BETTER TO RENT THAN OWN? DEPENDS ON INDIVIDUAL CIRCUMSTANCES. >> THERE'S A LOT OF AMERICANS WHO ARE REALLY STUCK BETWEEN A ROCK AND A HARD PLACE. RENTS ARE GOING UP IN SOME CITIES AS MUCH AS 20%, 30%. YOU CAN UNDERSTAND SOMEBODY WHO SAYS, MAYBE I SHOULD BUY A HOUSE. BUT BUYING A HOUSE IS ABOUT MORE THAN JUST AFFORDING THE MORTGAGE. THERE'S CLOSING COSTS. THERE'S TAXES. THERE ARE OFTEN THINGS THAT HAVE TO BE FIXED. >> I ALWAYS SAY, CHOOSE YOU. BEING A HOMEOWNER DOES GIVE YOU SOME SECURITY. IT COMES WITH ITS RESPONSIBILITIES. BUT IT'S YOURS. >> Reporter: FOR

This transcript has been automatically generated and may not be 100% accurate.

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