Are you watching local real estate prices? You may notice that the prices are staying relatively strong, but the number of sales are slowing down. That’s due to interest rates being high in an effort to slow down inflation. Prices were skyrocketing and the Federal Reserve had to slow things down. Prices have not gone down but it is difficult to get an asking price, especially immediately.
You will need to be patient, especially if you are looking to make the value you are asking for. However, if you need to sell faster, lower the price at least 20% and you can expect to get more interest. There are still plenty of buyers out there and they will make you a serious offer if they can get a good deal.
Why They Could Go Up
If the job market dips and the cost of goods and services go down, it could cause the interest rates to drop. If that happens, the housing market could see an increase in value of 20-40% over the next five years, if not higher. While that seems like a lot, it’s not the prices that are keeping people from buying, but the interest rates. If people can get a 500k house at a low interest rate, they can make it work financially.
Right now, high interest rates alone are keeping the market from going up more. That’s something to consider if you are looking at investing long-term whether you are buying or currently own. However, if you are not sure prices are going to go up or even stay, the market is still strong enough to get value.
Why They Could Stay
Prices have not moved up or down much this year and that’s probably not going to change as interest rates are also not moving significantly. If rates go up, prices will go down. If rates go down, prices may go up. The question is when and how much. Prices could go down before rates do, but that would be based on the rest of the economy starting to struggle which right now does not look like it will happen this year.
Currently, interest rates are keeping inflation at bay, not great and definitely not lowering costs, but it is helping. If rates stay here for the rest of the year, prices will probably do the same. Rent is going down but not enough to impact housing prices yet.
Why They Could Fall
There are two primary ways housing prices could fall before the end of the year. The first has to do with interest rates. If the Fed decides that the only way to get prices down on goods and services is to raise rates significantly, it would cause a drop in prices as the buyer pool will be cut even more.
The second primary way real estate prices could fall before the end of the year, is if the rest of the economy starts to struggle. This will be first noticeable in the job market with major layoffs. If unemployment rises and consumers stop spending, rates may become insignificant for many of the people who can still buy right now.
What Most Expect To Happen
While no one really knows what will happen, more than likely prices will remain similar to where they are as interest rates will as well. Consumers are still spending and houses are still being sold. That means the economy is still strong while rates remain steady. It may move in one direction or the other, but the end of this year seems too soon for it to do either significantly.
