Interest rates are up and it is keeping homeowners from selling their property quickly and at the initial asking prices. It’s a far cry from where the market was at a couple of years ago and there are no signs that things are going to change. However, you would not know that the market isn’t at its healthiest right now if you spoke with realtors.
They understand that this is just part of the process and cycles in the industry. However, they see major potential in the markets, not just now but in the near future, whether rates stay up or not. There are several reasons for the optimism but you have to remember that all local markets are different and if you want to know what to expect in your area, you need to work with a local realtor.
Why Realtors Are Optimistic
There are several reasons why realtors are optimistic about the current and immediate state of the market. However, you have to remember that they are not experts and you have to move forward with what you feel comfortable with. Do not make decisions you are not researching and discussing, especially if you are making your first major real estate decision. Here’s why the markets are still deserving of optimism.
- People are still buying: Yes, that’s right. Despite interest rates being high, despite new buyers having to pay thousands per year extra for those interest rates, homes are still being sold in the United States of America. It may be at a much slower rate compared to two years ago, but it’s still happening.
- Values are staying up: Even with the increase in rates, values have maintained their levels. If you compare values of properties from five years ago, many are still worth double what they were at that time.
- Assumable mortgages: If you haven’t heard about assumable mortgages, ask your realtor. This option is becoming very popular because it allows homeowners with mortgages at very low rates to possibly transfer the loan to the new buyer, saving them money and improving the deal you get on your property. It does not work for every type of mortgage so you need to find out if you qualify.
- Lenders still need your business: Mortgage lenders are still dealing out loans and they are not going anywhere. Yes, right now times are a little leaner for them but they are still in business and making money.
- Inventory is going back up: With homes slower to sell, inventory is finally starting to move up. Neighborhoods that would struggle to have a single house on the market for more than a month are now seeing multiple sit. That may not sound good for you right now, but for a buyer, it makes moving forward much more appealing.
- Other markets are impacted by increased rates: Yes, the rates are impacting real estate a lot but they are impacting other markets and industries as well. Real estate has more options to get around the issues or even minimize the challenges that come with increased rates, although those options are different for each person.
- AirBnb & renting: Another secret to the industry most are not aware of is that buyers are looking at properties much differently than they did in the past. Thanks to apps, it’s never been easier to find renters and even short-term options with AirBnb. Because of that, having inventory becomes more valuable to a buyer than just the deal they get on it. The ability to buy a home and within a month or two have income generated from the property that will help you cover the costs is very appealing to buyers right now.
- Investors: These options have not only motivated buyers but investors as well. Knowing they may not get a large profit from a sale, many investors turned away from real estate as prices and rates went up. However, knowing you can turn a profit potentially every month you hold the property as you wait for rates to improve gives these buyers more motivation, especially with inventory higher.
- Construction industry is healthy: The real estate industry often gets compared with construction more than anything. If construction is going well, especially because of new construction as well as remodeling, then it’s a sign that people are still spending big money on properties. Right now the construction industry is in the best shape it’s been in years with workers having plenty of work and making more money than they have in the past.
The market may not be right for you right now. However, it may also be perfect depending on your options and goals. If you can build a strategy based on the current market and expectations down the road you could take advantage of a higher inventory and homeowners who are more open to work with you.
