Last month we covered the assumptions buyers make about their own finances that turn out not to be true. This month, housing data gives us a different set of assumptions worth examining — ones about the market itself.

Many buyers are sitting on the sidelines because of what they believe is happening out there. Some of those beliefs were accurate a year or two ago. Many of them are not accurate today. Here is what the data shows.

"There Is Nothing in My Price Range."

More entry-level homes are available than most buyers realize.

Entry-level home inventory rose 4.5% year over year in June, while luxury home inventory fell 5.2% over the same period. (Zillow) More entry-level homes are hitting the market at exactly the moment fewer buyers are showing up for them. That means more to choose from and less competition for buyers who are ready to move.

Are entry-level homes actually entry level?

Entry-level homes are generally those in the 5th to 35th percentile of home values in a given region. Nationally, that works out to homes worth around $202,000. (Zillow) This number looks very different depending on where you are searching. What counts as entry-level in San Francisco is not the same as what it looks like in Memphis or Indianapolis — but because it's a percentile, they're houses at the lower end of the market.

A local loan officer can tell you what inventory looks like at your price point in your area.

"Sellers Overvalue Their Homes and Won't Negotiate."

Sellers are coming to the table more realistically than they have been in years.

The dynamic that defined 2021 and 2022 — listing high and waiting for a bidding war — has shifted considerably at the entry level. Here is what that looks like in the data.

Asking Prices Have Been Falling for Nine Months Straight

The national median asking price fell 2.4% year over year in July, the ninth consecutive month of declines. (Realtor.com) In June the drop was 2.5%, the steepest single-month decline since 2017. (Realtor.com) Sellers are pricing more realistically from the start rather than listing high and hoping.

One in Four Entry-Level Sellers Cut Their Price in June

Entry-level home sales fell 5.4% year over year in May, which means sellers in this segment are sitting with their homes longer than expected. (Zillow) One in four had already cut their asking price before a buyer even made an offer. (Zillow) Sellers who are sitting longer are motivated sellers — and motivated sellers are open to negotiating on price, closing costs, and terms.

"I Will Lose to Investors."

Large corporate investors were a real force in the market. That has changed significantly.

For several years following the pandemic, large corporate investors were buying single-family homes with cash at a significant scale. That is well documented. What has changed is the scale of their involvement and what the rules now allow.

Most Investor Activity Today Comes From Small, Local Buyers

Today, 96% of investor-owned single-family homes belong to small investors — people who own between one and ten properties. Large institutional investors only own roughly 2.2% of all single-family homes nationally. (TRD Data)

Federal Rules Have Restricted Large Buyers Further

Under the 21st Century Road to Housing Act, investors who already own more than 350 single-family homes can no longer buy additional properties from existing housing stock. Large investors have since been selling more homes than they buy. (Inc.)

The competition that remains is mostly from small, local buyers rather than large corporations.

"Interest Rates Are Making My Monthly Payment Too High."

Rates are a real factor. But the monthly payment picture is more encouraging than the rate number alone suggests.

Incomes Are Growing Faster Than Monthly Payments

The median monthly payment on a new mortgage application was $2,191 in June, slightly lower than the month before. At the same time, household earnings grew 4.6% over the past year. (MBA) In plain terms: a mortgage payment takes up a smaller share of what most people bring home each month than it did a year ago.

Headlines About the Market Don't Tell the Full Story

More entry-level inventory. More motivated sellers. Less corporate investor competition. Monthly payments consuming a smaller share of income than a year ago. None of that means buying a home is easy or that every situation works out. But it does mean the picture looks meaningfully different from what a lot of buyers have decided is true without checking recently.

If you have been holding back because of what you believe is happening in the market, it may be worth finding out what is happening at your price point in your specific area. That is a conversation a loan officer can have with you in a few minutes. Fill out the form below and let's talk about what we can make possible.