June Market Report

First let’s talk about banking.  Two major players (Citizens and Key Bank) recently pulled out of all mortgages in resort markets.  If you remember in March I wrote about the FANNIE MAE requirements for second homes that is making it extremely undesirable to get a conventional loan for a second home (higher rates, larger down payments, etc).  This means banks doing conventional loans have to add those loans to their balance sheet as they can’t be sold to FANNIE MAE without the extra high costs, which no one wants to do.  This caused these two banks to pull out of the resort markets across the US.  Will more banks follow?  I suspect at some point they will have to.

What happens if buyers can’t get a mortgage for a second home?  Or they become so scarcely available they price themselves out of possibility?  Do we become a cash only market?  Time will tell!

Meanwhile, rising rates have pushed buyer demand extremely low, and yet inventory is just as low if not lower.  This strange anomaly is the only thing stopping prices from plummeting down.

The one thing that could cause inventory to jump this fall is the struggling rental market.  Whether it’s inflation, unemployment, or just being cautious, this year’s rental reports are showing some real struggles.  Across the country Airbnb owners are reporting 25% drop in bookings.  Most owners are making adjustments to the weekly rates to entice bookings.  Let’s just say it, the COVID rental bubble is officially over.  Back to the way it was before.  So, this could cause some of the short term buyers banking on high rental returns to throw in the towel and sell, while they can still get fairly good prices.

Either way, it’s going to be an interesting year for sales.  There are several things to watch, mortgage availability, rental performance, and increasing supply.  We could end up with a “perfect storm” this fall!

If you are thinking of buying or selling, call me to discuss the perfect strategy to fit your needs.