Source: Yahoo! News —
Kinloch Partners Co-Founder and CEO Bruce McNeilage joins Yahoo Finance Live to discuss the continued impact of mortgage rates on homebuying trends, housing concessions, and rising housing markets to watch in 2023.
Video Transcript
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– Homebuilders are feeling a bit better about the housing market, albeit just a bit, as sentiment ticked up in December for the first time in a year. Let’s talk about where housing is headed and where it’s hot in ’23 with Kinloch Partners Co-founder and CEO, Bruce McNeilage. Bruce, good to see you back here. Broadly speaking, how do you characterize what you’re seeing out there in the market to start this year? And is the worst behind us?
BRUCE MCNEILAGE: So I don’t think it is. I think we are going back and forth. I think the market is still finding itself. And I think builders have really adjusted to things to increase sales, to increase traffic in their models. But I don’t think the worst– I think we’ve got some ways to go before we start ticking back up in the housing business.
– We are seeing homebuilder stocks up pretty much across the board. KB Homes, Toll Brothers. Lennar, D.R. Horton– all of them up between 5% and 11%. Now granted, that’s after a tough 2022. But are you optimistic for the homebuilders? And what are you hearing from them?
BRUCE MCNEILAGE: So I’ve taken a poll and talked to many of them here in the last few days. And they’re seeing more traffic, but traffic doesn’t necessarily equate to sales. And so people are coming in. They’re looking at the houses.
The builders are doing a great job with concessions and some incentives, buying down the mortgage rates, the interest rates. And so we’re starting to see some things turn. But high interest rates, the 6 and 1/2% or so range for the 30-year fixed mortgage. That rate is still keeping some people away from buying houses.
– Where do you see that mortgage rate heading in 2023? And where do you see it flattening out? Will that be enough to kind of thaw things out?
BRUCE MCNEILAGE: I think if we can get to 6% sometime to the middle of the end of this year, that will really help builders and also buyers of homes. The people that are most affected are the entry level buyer. And I think with the incentives, maybe reduction of prices a little bit, and the easing of these mortgage companies to give mortgages I think will really, really help.
– You talked about concessions. It’s remarkable how many of them– that has really been the theme of 2022, which continues into ’23. 42% of all transactions in Q4 had concessions. That’s almost double from earlier in the year. What types of concessions are you seeing the most and where?
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