Is the real estate market in a good place right now? That depends on who you ask. No one is a fan of interest rates but they understand why they are up and why what’s being done is being done. More on that later. The focus of the real estate market has changed in the past year. Affordability is now a major concern as home prices have not dropped while interest rates have remained high. The problem, as far as why rates are not going down, has to do with spending and inflation.
Inflation is one of the main reasons why rates had to skyrocket. However, spending has not slowed down. People are still going to concerts and spending their money and that has made the impact of the rates less effective, which means it’s hitting the real estate market even more. If you are on a popular site, you can see houses that have been listed for months rather than weeks like you would in years past.
Where Is The Market Now?
Currently, most real estate markets are experiencing the same thing. There are more houses available, their values are still decently high, but they are staying on the market far longer than before. This of course is frustrating sellers who want to get top dollar and quickly. However, there are houses that are selling and owners are getting reasonably solid value or near asking price. The key factors in that outcome seem to be patience and the quality of the property.
If the house needs a lot of work, you should not expect to see buyers offer near asking price. They do not want to put in the money that’s going to be required and have to deal with minimal profits. On the other hand, if the property is in terrific shape, buyers are more open to the idea of borrowing a bit more because they will save on construction costs.
What Is Impacting It?
Interest rates are being driven by inflation. However, spending is the real culprit that is hitting the market hard. People are still spending and that means the economy is still moving forward. This of course is great news for millions but it’s also why the costs of goods and services continue to go up. Ideally, a cool off will come where unemployment rates remain low, but prices come down a bit and the economy can reset.
Many feel that it is unlikely that homes will see a drop in value more than 20% if that were to occur. However, one of the things that is making it look more unlikely that a cool off could happen is that assumable mortgages are also becoming more popular. This option gives buyers a chance to save potentially thousands on a property if the current owner has a mortgage that can be transferred.
Where Will It Be By The End Of The Year?
Many are seeing strong signs that the real estate market is going to remain similar to where it is now by the end of the year. That’s most because of the fact that interest rates are remaining high. If there’s a dip in prices it should not be drastic and would be done more in situations where homeowners need to sell and cannot wait.
Investors will take advantage of these opportunities and first time buyers will also take advantage of options available to them. Inventory is going up which is giving buyers more options and better opportunities to find the property they want. The challenge for buyers will be to have the income and financial credentials needed to purchase and keep a home with these inflated costs and rates.
What Are Your Options?
Working with a realtor allows you to review your options not only based on the current state of the market but also whether or not you personally have the option of buying a home right now, selling yours or whether waiting would be wiser. If waiting is smarter, it’s because you either need time to build your finances or make improvements on the property. Either way, those steps should be taken if you are serious about moving forward because whether the market goes up, down or stays the same, those improvements will benefit you.
If the market goes down and you lose value in your property, you will have the advantage of knowing that rates will be going down soon as well. If that happens, buyers will pay top value for your property if it is in terrific shape meaning you are still getting your money but now you have a far easier time of doing so.
What Else Could Happen?
Prices may actually go up as properties are still being sold. Homeowners have the option to rent out rooms in their house, making it more affordable for them to cover more expensive mortgages. If you are in the market for a home, now is a good time to buy if the numbers work right for you. However, it’s never easy to predict what will happen in the future, the only thing you can do is try to improve your situation. That’s what realtors would recommend, especially if you are not ready right now.
