“What is going on with the real estate market?” It’s a question we receive daily, and wanted to share a few thoughts with our friends & neighbors.
Summer is here, and this is a time we usually experience peak pricing and sales. It’s still a great time to consider selling, but there are also new opportunities for buyers! A significant factor in the shift we’re experiencing right now is a result of the rising interest rates, looming recession, stock market fluctuations, etc. In June, the Fed hiked the Fed Funds Rate by 75 basis points due to high inflation, and it’s expected they will increase the rate by another 50 to 75 basis points at their meeting later this month.
For buyers, this increase will continue to affect interest rates, and the amount buyers can afford to spend on a home due to their increased loan payments. The good news is there are great options for buyers to purchase a home with cash or explore creative financing programs. In addition, there is less competition in the marketplace as many buyers sit on the sidelines waiting to “see what happens” with our economy. However, many buyers will plan to purchase now and refinance in a few years when rates may be lower. Additionally, we have more inventory available today than we’ve had in recent years, which has leveled the playing field for many buyers.
Bottom line: Buyers have an opportunity to purchase a home without intense competition and potentially avoid multiple offer situations. Despite the higher interest rates, buyers may fare better with a slightly higher interest rate than paying well over the asking price for their dream home. Many of us remember that multiple offers were not unusual to drive prices 10% – 35% above the list price.
For sellers, the data indicates we continue to be in a seller’s market, but it’s not the fierce market we experienced over the last 18-24 months. We are entering a more balanced market, and it will be necessary for sellers to price their homes accordingly. Many sellers have priced their homes based on sales activity earlier this spring, which has resulted in longer days on the market. Additionally, because there is more inventory available for today’s buyers, many homeowners have had to reduce their prices to become more aligned with today’s market and to make their homes more attractive to prospective buyers. We are also seeing many buyers request closing cost contributions to assist in buying down their interest rate.
Bottom line: Sellers will have the most success by pricing their home conservatively and ensuring their home is in peak condition prior to listing. Today’s buyers have more choices due to the increased inventory and it’s important to take care in setting your home apart from the competition.
With this said, there continue to be great opportunities to buy, sell or lease a home in today’s market.
We’re in a unique market and always happy to offer guidance if you are considering a move now or in the future! We’d love to hear from you – firstname.lastname@example.org. Thank you to @independencetitle for providing the stats!