Home buyer – many things are different now!

“The housing market now and tomorrow”

Home buyer – many things are different now!
We regularly read in the newspapers how the housing market is picking up and slowing down. Prices have started to rise or are going down again. Most often – and this is only natural – the voice is that of licensed realtor, brokers or their lobbyists or financial institutions. All are undoubtedly ‘experts’, but all also have their own axe to grind, so to speak, at least to some extent.

The recent webinar offered by Alma Media and Etuovi.com also made a strong showing in the same positions. It is now clear to most that “the tide has turned”. However, it seems to me that this is largely a wish for the housing market. That we are going up, aren’t we?

Of course, it is clear that the tables have turned. New mortgage loans taken out by households have increased during the first part of the year. However, they are still less than half of their 2021 level.

Those planning to buy a home are more willing to move ahead than last year. But less ready than in 2023.

Marketing times for second-hand housing are still exceptionally long. Even according to statistics. The reality is probably even harsher than the statistics, because the statistics do not know whether a property is removed from the housing portals because it sold or because it did not. And so on.

One notable finding from this webinar was that banks have clearly tightened their lending. This was specifically mentioned by both the bank representative and the brokers. This was a welcome observation: Banks have started to pay more attention to condominium’s situation, its finances and the potential repair debt. OUN® has long been drumming up the importance of these issues for homebuyers and therefore we offer services to assess both the finances and the condition of the buildings.

In the housing market, according to brokers, the almost extinct housing investors and flippers have at least returned to the market, even if there is still no rush.

The latest twists and turns in government

Until recently, the authority (broadly defined) was concerned about household indebtedness. At least until 2021, the Bank of Finland and the Financial Supervisory Authority (only in Finnish, sorry) have been calling for various restrictions. And so, at the beginning of July 2023, a decision came into force that new mortgage loans must be repaid in 30 years at the most. In addition, the financing of the home to be purchased could not exceed 90% of its price. For first-time home buyers, the level had previously been 95%. First-time home buyers were also exempt from transfer tax under certain conditions, but that exemption ended in 2023.

It was quite clear to the majority of those involved in the housing market that these decisions were going to make the housing market more difficult and slow it down. And they did.

But now the state wants to play its part in boosting the housing market! So now the loan period is (again) going up to 35 years and the rate is 95%. This is a very nice and welcome development for those selling, buying or otherwise working in the housing market.

And then there’s KVKL

The Real Estate Agents’ Association (KVKL), which has also become active due to the slow market.
KVKL publishes and maintains the industry code of good practice, the Good Brokerage Practice. Without much ado, the Code has made a fairly significant change to the previous one, regarding the conditional offer to buy a residential property. Typically, a buyer has been able to make a conditional offer, with the offer becoming binding when the condition is removed/fulfilled. The seller may have received only one conditional offer at a time. It was always possible to override a conditional offer with a direct purchase offer.

The latest update allows the seller to accept multiple conditional offers. In my opinion, this takes away from the whole concept, but it is certainly in the seller’s interest. But it puts the buyer and realtor an extremely awkward position: The buyer cannot be confident of closing the deal even if the conditional offer to sell his own home is successful. (Of course, this risk has always existed if the property is bought from behind by someone with a direct offer.) The agent, on the other hand, has to be very alert to the timeline, communicate very carefully and cautiously, and hope that everything goes through without a bruise. This is particularly important in real estate transactions. Example: buyer 1 makes a conditional offer to buy a detached house, subject to an inspection. The cost of the inspection is shared equally between the bidder and the seller. However, Buyer 2 has also made a conditional offer to buy the property, on condition that he sells his own home. The surveyor inspects the property and withdraws to prepare a report, which he promises to deliver the following day. The evening before the report is due, however, Buyer 2 announces that he has sold his own home, i.e. the condition has been removed. And so can get on with the deal, while Buyer 1 is left with the condition inspection report and 50% of the invoice. 🤷‍♂️

No envy realtor.