Helping buyers and sellers navigate this shifting real estate market.
Are we moving towards a more normal real estate market? The Federal Reserve recently hiked its rates by 75 basis points to curb high inflation. That is the largest rate hike since 1994. It’s important to note that the Fed key rate often influences mortgage rates, although it does not directly affect them. However, with mortgage rates already hovering around 6%, this may further decrease an already shrinking buyer pool.
The Fed rate has risen by 175 basis points so far this year, and the 30-year fixed mortgage rate has jumped up 300 basis points. Unfortunately, many aspiring home buyers are now being priced out due to the increases in home values and interest rates. This has led to an unprecedented 41% drop in mortgage applications since this time last year.
Some homes are still selling quickly and for over the asking price. Most are not as fortunate and are taking longer to sell. The good news for sellers is that competition is still extremely low, and the craziness from the past two years has led to high property values that are not going down yet. However, many have predicted that values may decrease this fall. If you’re considering selling your home, you may want to do so in the next few months while inventory is still relatively low and values are still high.
Buying a home in any market is a very personal decision. If you need to buy, then do it, but don’t overpay or settle on a home just because you feel like you have to. Homes sitting on the market longer means more inventory and more options for buyers. The shrinking buyer pool means fewer bidding wars and more reasonable seller terms. However, buyers should keep an eye on interest rates. Rates will likely continue to rise, but if they go down after your purchase, you can always refinance.
We are heading towards a more normal market, but sellers are still in a position to have a quick successful sale, and buyers now have more options and more time to make those important decisions. If you have any questions, don’t hesitate to reach out to me by phone or email. I look forward to hearing from you.