After examining historic market data, listening to respected real estate analysts, and taking account of several other existing contributing factors, the housing market is beginning to experience a shift. And it’s a shift that you’ll want to be aware of.
In the past couple of months, we’ve seen several indicators, that have already begun to impact the real estate market. We want to share those indicators with you.
- Mortgage rates are going up and are predicted to continue rising - Historically, the spike in interest rates slows down pricing. Potential buyers are not able to afford as much home, and the seller must adjust if they are truly motivated to sell.
- Entry-level homes may remain in a seller’s market, but some luxury and move-up markets show signs of shifting.
- Affordability is worsening - Due to stagnant income wage growth, the continued shortage in low-to-moderate-priced inventory, and rising mortgage rates, affordability continues to plague the market. This also stalls the market.
So, what can you do?
- If selling your home, we recommend to do it as soon as possible. You will most likely make more money off the sale of your home now, than if you wait.
- But buyers, don’t start thinking, “Ok. I will just wait until next year and it will be a buyer’s market again!” Maybe it will, or maybe it won’t. It’s too early to tell. But regardless of it being a buyer’s market or a seller’s market, the gift of today’s market is that interest rates are around 4.5%. This is an incredible opportunity to leverage yourself with historically low rates. Interest rates are expected to rise two more times before the end of this year.
Advice for Buyers: Don’t Get Greedy – It’s Not a Recession
I’m sure it’s been frustrating for buyers over the past few years of having to deal with low inventory, high prices, multiple offers, and over-asking contracts.
Certainly, it is more common to see below-asking price offers, but don’t get carried away. The goal of a buyer is still to buy a home, not to tick off a seller so much that they don’t respond to an offer.
If a buyer is serious about a property, make a reasonable offer — and expect an appropriate counter— but don’t expect to get a property for pennies on the dollar. It’s not a recession.
Advice for Sellers: Buyers Will Pay for the Perfect Home
In the past six months, buyers have shown they are willing to meet or exceed the asking price if the home is “perfect.” What exactly does that mean? It means they want it to look like a home featured on an HGTV show.
If a home isn’t an open concept home with grey walls, white cabinets, subway tile, hardwood floors, open shelving and trendy light fixtures — then it will sit, sit, sit.
It’s not that homes aren’t in good condition, it’s that prices have become so high that buyers expect perfection for a resale — or they will wait for the purchase price to drop.
In conclusion, the pendulum is swinging more toward the middle — not a seller’s and not a buyer’s market — but a happy medium where real estate is beneficial and palpable for everyone involved.
As always, if you have questions or comments, please contact us anytime.