If you are reading and listening to the news media report about the real estate market this year, you are probably very confused. One headline will say home prices are falling. Another talks about how buyers are still flooding open houses even with higher rates. Still a third will predict another 2008 and a rising number of foreclosures and short sales.
Sensational, confused, and conflicting information has kept many potential buyers and sellers on the sidelines, leading to two conflicting emotions. The first is fear. The fear of buying now because prices and interest rates are too high, and the fear of selling of reports of lower prices and lack of choice on the next home. The second, and contrary, emotion experienced is the fear of missing out on a market where prices are flattening and there is less competition.
So what is the true state of today’s housing market? Many articles talk about this being a slow year in real estate. From the total number of homes sold, that would be true, but that is caused by a lack of available homes to purchase, not a lack of interest from buyers. For any individual home that is in good shape, the market is not slow but very fast, with multiple offers still being the norm for nice homes priced correctly. So a slow market in total sales, but a fast market for nice homes. Multiple offers are keeping prices steady, not dropping.
A wave of foreclosures never materialized, and a drastic drop in demand predicted by so many never came to be. Prices in real estate are a function of supply and demand, so while it might be true that some buyers dropped out of the market because of higher interest rates, this has been offset by one of the lowest levels of inventory of resale homes going back decades. Supply and demand have been in balance so home prices have not plummeted.
So prices have flattened but interest rates are still higher. What should potential buyers and sellers do in this market?
If you are currently renting and want to buy, now is the time.
There is a pack of sidelined buyers just waiting for interest rates to drop so they can jump back in the market. And at that time, they will all be competing with each other! Rather than waiting and competing with multiple buyers, the smarter choice would be to buy now and refinance the interest rate later. Right now, the competition is not so stiff. This is allowing buyers to buy at a lower price, and not have to give up contingencies like the home inspection, which was a common occurrence one year ago.
If you are looking to sell your current home and buy a new place, now is the time.
One concern for current homeowners wishing to move on to another home is, in a market with tight inventory, will they be able to find the next home if they sell the current one. If you will need to sell your current place before buying the next, that will be much more easily managed in a market where there is less competition. Whether you sell with a clause allowing you to find your home of choice, or close early and receive a rent back from the buyer for a period of time, or utilize a bridge loan, we have several strategies to help buyers in this situation. We’d be happy to talk that through with you.