Is the current real estate market strong? It depends what you mean by that. From a value standpoint, the current market is outstanding. From a sales standpoint, it’s not as strong as it was two years ago. Interest rates have skyrocketed in an effort to cool off the market and it has been a success. However, with inflation staying high, rates are not able to go down yet and that’s creating some stress in the market.
We do not know when the rates will drop. It may be months, a year or longer. The reason is because despite the high costs of goods, services and property, people are still buying. Properties are maintaining their values and, despite increased interest rates, are still being sold. That means someone is paying three times the value and monthly payment for a house that the previous owner was paying if they purchased the property 10 years ago. That’s too fast a ramp-up in any market.
Positives Of The Real Estate Market
There are positives to the market slowing down. More people will be able to afford a home in the next three years if interest rates are lower because prices have not been able to continue to skyrocket. Additionally, realtors see advantages to the current market that buyers and sellers need to be aware of:
- Values are staying up: Home values are staying up. It doesn’t matter what you’re seeing on the apps in a specific area. Prices are down 10-20% in some areas but that realistically is not even considered a drop considering how quickly things ramped up. A property that went from 250k in 2016 was sold for nearly 500k in 2021 but is now worth 450k. That’s not a bad drop but you can understand where the new homeowner would be a bit concerned.
- Sales are still happening: Property sales are still getting done every day. Buyers are finding ways to make the numbers work and homeowners are happy with the values they are receiving for their property. It may take longer than it did before, but if you have a strong property at a fair value you’re going to find a buyer.
- Interest rate workarounds: Yes, interest rates are really high right now and it is keeping buyers from getting deals done. The difference between rates now and two or three years ago literally amounts to hundreds of dollars a month and tens of thousands of dollars in increases between now and the full payment of the loan. That’s why you have to look into alternative options like rent-to-own, assumable mortgages and more.
- Rent is cooling, a little: No, rent is not cheap or even cheaper. However, most areas are seeing a slight drop in rent which is going to help prospective buyers save up more money for a downpayment.
- Demand is still high: A new property is getting viewed by thousands of people online the first week that it is listed. Think about those numbers? That’s without an open house or any calls yet. That’s how high the demand is and buyers are looking for the right deal. If you need to sell fast, you can still find the right buyer.
- Foreclosures remain low: If you take a look at the current market, there are not many low-priced properties out there. This is why values are remaining high. With a low number of foreclosures, sellers are able to keep their asking price reasonable. Yes, you may have to bend a little based on how quickly you want the house to sell. However, if you are able to wait, you can be confident that your value will stay up for the time being as foreclosure numbers have not spiked.
- Rentals are popular: Investors are buying up homes left and right to rent them out. This may give you a new advantage in selling your property if you have something that’s easy to rent out either to a single renter or multiple. Airbnb and other programs make it easy to find short and long-term tenants and investors need inventory to take advantage of that. If your property can appeal to this kind of buyer make sure you focus on that when trying to sell it.
Right now your property and situation give you some advantages and some disadvantages because of the current market. If your property is worth 500k and you want to sell it in the next month, list it for 450k and it will probably sell. However, if you want the full value of your property you need to be patient and work with your realtor. The market is tricky but it is still strong and the right buyer is out there.
