I am sure it comes as no surprise to you that there is a shift occurring in the real estate market.
The questions being asked, considered, and predicted among industry experts, real estate professionals, and homebuyers and home sellers include the following:
Is the housing market going to crash?
What is happening with mortgage rates, now and in the future?
If the economy slows further, what does that mean for real estate?
What is ahead for home prices?
Should I wait to buy a home?
Read on as we explore these questions and discuss the predicted outcomes.
Is the housing market going to crash?
With all the headlines and talk in the media about the shift in the housing market, you have probably been thinking this is a housing bubble and that we are headed for a crash. Well, it is only natural for those thoughts to creep in and make you think it could be a repeat of what took place in 2008.
The good news is, there is good data showing why the current real estate market is nothing like last time.
If you are concerned we are making the same mistakes that led to the housing crash, the graph below should help alleviate your fears.
There just is not enough inventory on the market for home prices to come crashing down like they did the last time, even though some overheated markets may experience slight declines.
Contact us if you would like to talk about your housing needs and goals in today’s market.
What is happening with mortgage rates, now and in the future?
One of the biggest factors of the housing market cooldown we are seeing is the swift rise in mortgage rates. And as that volatility continues, many people are asking “are mortgage rates going to keep rising?”
But to answer this question, you have to first understand the why behind the reason mortgage rates have doubled since the beginning of the year: inflation.
In an effort to ease inflation, the Federal Reserve is taking steps to try to tame inflation by slowing the economy, and those decisions are having an impact on mortgage rates. And until that is under control, rates will continue to respond to inflation. If inflation eases, rates may as well.
If you are waiting for mortgage rates to drop, you may be waiting for a while as the Federal Reserve works to get inflation under control.
And if you are considering renting as your alternative while you wait it out, remember that is going to get more expensive with time too.
Each person’s situation is unique. To make the best decision for you, let’s connect if you would like to explore your options.
If the economy slows further, what does that mean for real estate?
Post-2009, nothing will strike fear into the hearts of buyers and sellers like the word “recession.”
But as the economy slows down, history tells us this would likely mean lower mortgage rates for those looking to refinance or buy a home.
While no one really knows exactly what the future holds, one thing will forever remain the same: people will always need a place to call home.
Historically, each time the economy slowed down, mortgage rates decreased.
And while history does not always repeat itself, we can learn from it. While an economic slowdown needs to happen to help taper inflation, it has not always been a bad thing for the housing market.
Typically, it has meant that the cost to finance a home has gone down, and that is a good thing. Contact us if you would like to discuss what this means for your homeownership goals.
What is ahead for home prices?
After years of record-breaking price appreciation in the country, we have been seeing a very different scenario play out in the last few months.
In order to truly understand why this is happening, this quote from David Ramsey explains it all:
“The root issue of what drives house prices almost always is supply and demand.”
As the housing market cools in response to the dramatic rise in mortgage rates, home appreciation is cooling as well. And if you are following along with headlines in the media, you are seeing conflicting messaging.
The most likely outcome is we will fall somewhere in the middle of slight appreciation and slight depreciation. Contact us if you would like for us to help you navigate what is ahead.
Should I wait to buy a home?
This is probably one of the biggest questions on your mind right now if you have been thinking about buying a home.
Despite the volatility we are seeing in today’s housing market, it is important to remind ourselves of the many financial and non-financial benefits of homeownership.
Yes, affordability is a challenge right now. It is true that it costs more to buy a home today than it did last year, but the same is also true for renting. This means, either way, you are going to be paying more. The difference is, with homeownership you are also gaining equity which will help grow your net worth.
Data shows home values typically appreciate over time, and that gives your net worth a nice boost.
Homeownership does truly win over time. Don’t let the shifting market delay your dreams. Contact us if you are ready to buy or want to discuss your specific situation.
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