Mixed messages

Right now, the housing market is sending us mixed messages. As you’ll see, there are two sides to a lot of the data we’re seeing in the market right now.

In our first story, we discuss how mortgage-purchase applications are up, but we also show you why that’s only part of the picture.

In our second story, we discuss the drop in down payments, but again, we explain why that’s not exactly the whole story.

This just shows why, when evaluating the market, it’s so crucial to evaluate several data points, instead of just one. That way, you can get the full context of what’s really going on.

So let’s dig into all that context right now in this edition of The Blueprint!

– James and David

Notable rise in mortgage-purchase applications

Mortgage-purchase applications rose 10% week over week and 20% year over year, according to the latest data from the Mortgage Bankers Association. That’s a surprisingly strong signal of buyer interest, especially in a market still grappling with high rates and affordability challenges. Redfin and HousingWire also point to several mixed signals across the market:

• Homes are selling for less than the list price. The median sale price was $397,000, nearly $30,000 below the median list price of $425,950.

• Pending sales are sluggish. They fell 1.1% year over year, hitting the lowest level for this time of year in Redfin’s records.

• Speed to contract is slowing. Only 37.6% of homes went under contract within two weeks, the lowest rate for early June since 2020.

• Listings are rising. New listings are up 5.2% year over year, with more sellers than buyers in the market right now.

• Buyer interest is heating up. Touring activity is up 23% since January, per ShowTime, and Google searches for “home for sale” are up 10% year over year and 16% over the past month (as of June 9th).

Our take

At first, it may seem like buyers are interested in making moves. Mortgage applications and showing activity are on the rise. But sales data tells a different story. Contracts are slow, homes are lingering, and discounts are widening. This disconnect shows us that the market is in transition. Buyers are waiting for prices or rates to budge. For now, sellers need to price sharply and stay flexible. Activity is up, but that hasn’t translated into increased sales yet.

Down payments see first annual decline in two years

In April, the typical homebuyer put down $62,468, a 1% drop from a year ago. This marks the first annual decline in nearly two years. However, in percentage terms, down payments have held steady at around 15% of the purchase price, according to Redfin’s latest report on buyer financing trends. Here’s what else the April data shows:

• Since not all homebuyers make down payments, they are falling in dollar terms, even though overall home prices are rising slightly.

• 30.7% of home sales were all cash, down slightly from 31.6% a year earlier. The highest share of all-cash deals was in Cleveland (50.2%) and West Palm Beach (50.2%), while the lowest shares were in Oakland (18.2%), San Jose (18.3%), and Seattle (18.5%).

• Conventional loans still dominate. 77.5% of mortgaged home purchases used one.

• Government-backed loans are gaining traction. FHA loans were used in 15.3% of mortgage sales, up from 14.2% a year earlier. VA loans accounted for 7.2%, the highest April share since 2020.

Our take

While buyers are cautious, they are getting creative. The slight dip in average down payments, despite rising prices, signals that many are stretching to make deals work. This is especially true of first-time buyers relying on FHA or VA loans. Meanwhile, the high share of all-cash purchases shows the divide between equity-rich repeat buyers and everyone else. In a market where affordability is tight and competition varies by region, it’s not just about what a buyer is willing to pay, but how they are willing to pay.

All-cash investor deals hit lowest point in 17 years

While 62.3% of investors paid all cash for their properties in 2014, nearly twice the rate of all buyers (33.4%), the volume of all-cash investor deals fell to its lowest point since 2008. Why? Because small investors, who are more likely to use financing, drove more of the activity. Last year, small investors bought 361,900 homes, up 3.7% from 2023; meanwhile, large investor purchases dropped 8.7% to just 132,500, the lowest since 2018. As mom-and-pop buyers took a bigger share, more investor deals involved mortgages rather than cash.

Here are the top 10 states where investors bought properties in 2024, ranked by investor share of purchases:

1. Missouri: 21.2% 

2. Oklahoma: 18.7%

3. Kansas: 18.4%

4. Utah: 18.0%

5. Georgia: 17.3%

6. Montana: 17.2%

7. Mississippi: 16.7%

8. Wyoming: 16.3%

9. Indiana: 16.1%

10. Alabama: 15.9%

Our take

Two factors are drawing investors to these markets: low prices and scarce inventory. Affordable home values make these areas attractive for both rentals and flips, but that’s just part of the equation. For a rental market to work, prices have to remain relatively high, but also remain within reach of local incomes. If renters are priced out, the investment opportunity doesn’t work. Scarce or limited inventory plays a big role, too. Little inventory keeps pressure on renters to keep on renting. Landlords love a market where renters don't have too many options to become buyers.

The news that just missed the cut

• Ai agents are coming – here’s what you need to know

• Realtor.com enters the Clear Cooperation debate

• How to win listings when you’re stretched thin 

• The pace of office-to-residential conversions is accelerating

• 4 rate-lowering strategies to share with buyer clients

Foundation Plans

Advice from James and David to win the day

This week, we’re tackling a challenge many listing agents are facing–stale listings. In our last edition, we shared proactive strategies to help your listing stand out from day one. Today, we’re sharing three actionable tips to help breathe new life into a home that’s already been sitting. 

Invest in staging the listing – A fresh look can reframe buyer perception. According to NAR’s Profile of Home Staging, 50% of agents said staging reduced days on market and 60% of buyers said staging influenced their perception of the home. If hiring a professional stager isn’t an option, try AI-powered tools like VisualStager, Stager AI, or Virtual Staging AI. These apps let you virtually stage your listing photos. 

Refresh the listing photos – Most buyers begin their search online, so visuals matter. In fact, 90% of buyers under 58 say photos are the most useful part of a listing, according to NAR’s Generational Trends Report. Ask yourself:

• Are the current photos high quality?

• Do they showcase the home’s best features, and the lifestyle it offers?

• Do they highlight the neighborhood and amenities?

If not, it’s worth investing in a professional photographer.

Rewrite the listing description – Once you grab consumers’ attention with quality listing photos, the copy needs to close the deal. Revisit the listing description with fresh eyes:

• The intro/hook: The average online consumer only stays on a page for 52 seconds, so you need to hook them in from the very start of the listing description. Start strong. Catch buyers in the first sentence with a punchy one-liner.

• Add value with details: Call out recent upgrades, seller concessions, or standout features. Double-check your listing description and make sure you’re capturing the most crucial details of the home, beyond its location and number of rooms. Was a new roof installed? Did the sellers make an upgrade in the last decade? Are sellers offering anything to help buyers make their move? Call these things out! These key decision-making details can swing buyers’ perceptions and get more interest in your listing.

• The length: Once they start reading, is the description a little too long? Trim the fluff. Keep it concise. Cut what isn’t essential.

On that note, we’ll cut it right here. But if you want some great help, we suggest pasting the current version of your listing description into ChatGPT, Gemini, Claude, or Perplexity and ask it to rewrite it to be shorter, sharper, and more engaging.

We’ll be back Friday with more tips on this subject!

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.”— Steve Jobs

Each day is a gift – a chance to live the life that you want. Ruthlessly focus on your goals. Don’t let your past or the fear of being judged distract or paralyze you. Choose to live your life with an integrity that you can be proud of.

– James and David