Many news sources have the public worried about a slowing real estate market…or even worse, they might use the scary words like CRASH or RECESSION. Don’t fear, our stabilizing market is something we knew was coming. After 2 years of the craziest market we have seen in quite some time, we knew that something had to give. Well friends, interest rates are up in the 7%’s and buyers have either found a property or slowed down on their search, BUT where we differ from the 08′ market crash was that we just experienced major supply/demand market trends and we have a plentiful bounty of jobs available (where they massive job layoffs and no work in site). What do I mean?
The past two years we seen what we call a “listing shortage”, but not only a listing shortage, we had a housing shortage in general. The interest rates dropped to the low 2’s and 3’s and therefore buyers jumped on the idea of buying a house and quit paying for their landlord’s mortgage…that and rental prices seen quite a hike forcing them to want to own their own property. It just makes sense to buy and create equity rather than rent and throw away money. Now, this was a challenge, because of Covid many sellers decided not to list their home, and due to low interest rates the number of buyers skyrocketed…what did this do to our market? It caused prices to soar due to the demand of buyers looking to purchase, and the supply was limited…basic economics. We had buyers offering well over asking price, waiving inspections, all but offering their newborn babies… (just kidding, kind of).
Many of those buyers have found a house now, and because of the higher interest rates it has caused buyers to rethink exactly what they are wanting in a home. Mainly that is due to not being able to afford more towards the purchase price because the interest rate causes the bottom line of what can be purchased to drop. Where at 2% they might have been able to afford a $500k home, now at 7% they might only be allowed to purchase at $300k, the interest rate does matter but a great quote to remember is, “Date the rate, Marry the Home”. You can refinance down the road and lower your payment, rates are always changing. Just ask your grandparents, they bought a home at 10-20% interest rate, and your parents probably bought their home at 5%-8%, you see it’s always changing. But what doesn’t make sense is to pay for someone else’s mortgage.
So our market is currently stabilizing, it is going to take a little time for it to even out, because we have sellers who still believe that they can get what their neighbor sold their house for 6 months ago and buyers who now have to be a little more selective in what they can purchase, which means we are in a little bit of a stale mate. Once sellers see that our market has changed a bit, buyers will be ready to put in those offers. We just have to stay knowledgeable about the market, hire a real estate agent who knows your market, and everyone will win in the end! If you got value out of this post, feel free to follow along as we continue to strive to keep our clients up-to-date about our market and find the best ways to get buyers into new homes and sellers top dollar when listing! Make sure to call Pia Friend Realty Powered by The Gerety Group, LLC. for all your real estate needs!