The New New Normal
We are emerging from a Global Pandemic, unprecedented housing market and now we are faced with higher interest rates and more housing inventory. What's next? People need homes. That will always be true. Divorce happens, people relocate for jobs, kids move out, Mom or Dad might need care… there are so many scenarios that make us move. Don’t be scared of the changes in the market and believe me when I say it is still a good time to buy a home even with escalated mortgage rates and it is still possible to sell your home for a great price.
Yes, rates were lower and that is now in the past. Let it go. Rates will be lower again the experts say but right now rates are solidly in the high 5% and low 6% range til years end. Home values are still way up from previous years and with the right selling strategy you will still get a solid price for your home. Perhaps you have an FHA loan with a low rate, in some case those rates are assumable, same for VA loans. This can make buying your home even more attractive to buyers. You can also offer closing costs or money to buy down a buyer's mortgage rate to give yourself the winning advantage.
If you are a buyer who is not financially stable and looking for more affordable housing it’s a good time to rent. The cost to rent is actually down even though the rental market has escalated. It is still cheaper to rent than to own if you do not have a healthy downpayment to buy or pay down points to buy a more affordable mortgage rate.
It is good news for First-time Home Buyers too. There is less competition, there is about 17% more inventory than there was this time last year, so you will not have to compete as aggressively as you once did and home prices have come down some, especially in areas where home values were over escalated. As a result we have seen about a 5% adjustment downward in the past month.
Most sellers are still in a position to reap big profits because they’re sitting on a mountain of equity. In May, US single-family house prices jumped almost 45% from May 2020, the biggest two-year increase on record, according to an analysis of National Association of Realtors data going back to 1968. That capped off a decade of rapid gains.
An interesting statistic that looked at the demographics of the top buyers in 2021 broke down the numbers like this: 24% Gen X buyers, 23% Millennials and 18% Young Boomers. This is a great indication of who is driving the housing market and who will continue buying in the coming years.
Realtors like me need to be aware of the needs of buyers & sellers in this new market. It is important to have a frank and honest conversation with clients upfront so that they know exactly what they are getting into. Buyers need to be prepared by running numbers with their lender, getting not just a “pre” approved but conditionally approved with their lender before they find the home of their dreams. Sellers need to prepare their homes for sale and do as much updating as feasible if they are seeking top dollar. Even then, sellers may have less offers, offers may be lower, have contingencies or ask for closing costs.
As you can see the market is not dead, it has transformed and will do so again. No matter what the future holds for the real estate market, you can always rely on me. Reach out & we can talk about your options & come up with a plan. Real estate is not just my job but also my passion and I plan to ride out whatever changes come our way!
