Twelve percent of under-contract properties in the D.C. area were canceled, according to an article at WTOP.
Why?
Some buyers may no longer be eligible for the mortgage they were approved for when they first started shopping for a home due to the quick increase in mortgage rates. In January, the average 30-year fixed-rate mortgage was at 3.25%; for the week ending August 19, the average is now 5.13%.
Contracts are also being canceled because there is less competition among buyers, giving them a little more power and freedom to choose. They are also able to do home inspections again. And with home inspections can come tough negotiations and oftentimes canceled contracts.
A canceled contract can disappoint the buyer, but it is a major headache for sellers and real estate agents. After a listing has been taken off the market, it is exceedingly challenging for the seller to regain momentum when it goes back on the market. Buyers and their agents often have a negative feeling about the home, thinking… “What’s wrong with it?”
In the D.C. area market, there are 24% more properties listed for sale and 21% fewer home showings from buyers. The number of homes on the market for more than 3 weeks is the highest in more than two years.
This doesn’t necessarily mean we are heading for a housing crash. Our market is normalizing from the strongest housing market in recent times, we just have to get used to a new normal.
The thing to remember….move when life tells you to move, don’t try and time the market.