Throughout the country, different areas are noticing changes in the real estate market. Some of these markets are being impacted by inflation while some are being impacted more so by the selection available in the area. While the numbers are just beginning to turn in some areas, other areas of the country remain strong in home sales and prices.
However, many realtors are noticing some subtle or important changes in the market. These changes can be significant indicators in understanding how the market is performing and determining what your best options are, especially if you’re debating on whether to buy or rent a property.
Patience In Buyers
One of the indicators that things may be either slowing down in the market, or the inventory could be coming back is that potential buyers are being far more selective when they are looking at a home then they have been in the last couple of years. Realtors have literally been able to tell potential buyers to grab whatever homes they can grab that fit within their budget because selection has been so low. Because of this, buyers have ignored key factors and potential problems with the properties they are buying because they’re more concerned about acquiring the home, then any issues it may have.
While homes are still being sold at a fast pace, buyers are scrutinizing the property more than they have in years past. Part of this has to also do with the increase cost in construction as well as delays because of labor and material shortages. Because renovating may not be an immediate option, buyers want to know their homes are live-able for at least a year or two.
Adjustable Rate Relief
In order to combat inflation and the rising cost of home prices, interest rates are going up to calm down how quickly people are borrowing money. Even a small increase in rates can cost a homeowner tens of thousands of dollars during the course of paying off their mortgage. The idea is to increase interest rates so that people borrow less, allowing for prices to drop slowly but not collapse as they have in the past.
This is a proven method and has been effective in the past to slow down the rate of home buying. However, it has not exactly worked thus far in 2022. This is partly due to the fact that while home prices are still high, rent is equally as high and homeowners are more comfortable with going with an adjustable rate and paying more now as long as some of their monthly checks are going towards equity.
HOA’s Lose Interest
A surprising change in the market is that many potential buyers are willing to deal with inflated prices and even inflated interest rates as long as they do not have to deal with a homeowners association. In fact, many buyers are willing to ignore the added expenses that come with purchasing a single-family home, especially right now, if it comes with the freedom of not having to pay a monthly fee and deal with the rules of a homeowners association. Because a large amount of the real estate available is under HOA guidance, single-family homes are still in high demand.