Homebuyers: Know These 6 Things to Navigate This Market
Is the seemingly never-ending era of the seller's market finally over?
Can home buyers finally breathe a sigh of relief as they navigate an ultra-competitive housing market?
Let’s shed some more light on the recent changes.
To say that the housing market has been volatile over the past two years would be a gigantic understatement.
The pandemic created a perfect storm of factors.
A supply and demand mismatch and skyrocketing home prices have been tough for buyers.
We have seen the changes and a pertinent question looms, what are the main things every homebuyer needs to know right now?
1. More home listings don't mean lower home prices
While the pandemic-era trend of record home price growth is likely over, this does not mean that home prices are about to crash.
Buyers can expect cooler real estate market conditions, with home prices settling from the recent false appreciation of the 2nd quarter and then begin increasing at a more sustainable rate.
So, instead of the near 20 percent year-on-year increases, expect something closer to three or six percent.
2. Ultra-low-rate mortgages are no more
The era of historically low mortgage rates has ended, with mortgage interest rates now having crossed the five percent threshold.
Mortgage rates will not return to the all-time low rates homebuyers enjoyed pre-pandemic, historically, those were an anomaly.
3. Homebuyer competition is still high
You may see headlines suggesting that as interest rates rise, there will be fewer buyers on the market as mortgages become more expensive.
This isn't currently the case - the market is still competitive.
There are some factors at play in making the housing market so pressured, with demographics playing a key role.
An enormous number of millennials are currently attempting to secure homes before interest rates rise even further, which keeps competition strong.
Additionally, here in Silicon Valley we continue to have a perennial shortage of available housing.
4. There are signs that the market is slowly rebalancing
Basically, the seller's market conditions that have dominated the housing market throughout the pandemic are finally giving way to something more resembling an equal market.
Even though we don’t see this often in our local area, this is truly the definition of a normal market.
5. Home sales are on the increase
Home sellers are continuing to slowly come back to the market.
The wait-and-see strategy of the pandemic, where a lot of home sellers were holding back from listing their homes, is now definitely coming to an end.
Home sellers are finally taking the plunge and putting up their homes for sale.
This is a slow change, however, and there is still a deficit of new listings.
However, the overall trend should cause some increase in the number of homes for sale.
6. An immediate economic downturn is unlikely
Home buyers are worried about purchasing a home because of fears of a 2008-style crash.
But honestly, there is no need for that line of thought.
There are no indications that the rising interest rates will cause an economic downturn.
If homebuyers are hesitant to make a home purchase because they fear layoffs and/or unemployment, this factor is unlikely to come into play for several years yet.
Homebuyers ready to purchase should make decisions based on their current unique circumstances.
There is no immediate danger of a crash that would bring a collapse to housing market conditions currently.