Everywhere you look, the outlook seems bleak. It’s almost as if some people are hoping for a recession either to cool down prices or just so they can win an argument with someone. These are strange times and people seem certain that housing markets are heading for a correction. Even a 20% downturn, a modest adjustment considering, would only lower a bit before numbers immediately began to rebound.
The important thing everyone overlooks about the market is that it’s trends are some of the safest to follow in finance. Real estate is more predictable than nearly any venture and had proven to be a good investment time and time again. However, during times of inflation as we are currently seeing, interest rates must be raised in order to slow down the rate of price increases. This will make properties more affordable, eventually. However, sales will not begin going up significantly until interest rates go back down.
Interest rates will deter buyers easily as a single increase can cost new buyers thousands a year. For the average mortgage request, buyers will pay over $100,000 in interest before the loan is paid off. This adjustment has already led to home prices falling. However, realtors are not worried and it’s because of the cost of rent.
Renters are locked into their costs and chances are those costs are not going to decline drastically, when in a recession as the consumer dollar remains extremely strong and labor shortages are still an issue. Because of that, a significant drop in home prices, even one of 20% would lead potential buyers to consider applying for mortgages with adjustment rate options. If rent remains high, even higher rates will not deter buyers if the home prices are down.
Would this mean that these costs will remain high for even longer? Eventually, the economy will even out and be able to adjust properly. This means an adjustment price and then probable growth in a variety of middle class and lower middle class areas throughout each county. This influx of money and support will be from a combination of new homeowners as well as new business owners. These examples have been seen throughout the country where smaller communities are now thriving. It is expected that many of the communities that are seeing home values drop will see quick increases in sales as these prices will drop far faster than rent.
Over the course of the next two years, the market experts are preparing for much fluctuation and a bit of confusion. These adjustments tend to impact everyone differently but are needed to keep prices affordable and reachable. If you are not sure what to do based on your current situation, the best thing to do is get expert guidance. Perhaps you should not sell your home right now or try to purchase a new one?
The right realtor will make sure you are the right candidate as a client. If you are not ready to buy or sell based on your personal situation, they will be honest because ignoring these matters will not benefit them in fulfilling their responsibilities. Therefore, realtors are the best people to consult with regarding real estate matters and understanding where the market is and potentially going.