Client + Agent: Changes are Here
Changes are Here
Is this a good time to buy? Is this a good time to sell? Is it still a seller's market? These are some of the questions we hear and discuss amongst our team daily.
Companies rapidly shifted to a work-from-home model in 2020 as an answer to the pandemic. By and large, they found that employees were just as productive, if not more, and reported a better work-life balance. Once the world opened back up, many companies extended their remote-working policies, causing people to rethink what was their ideal home. This coupled with record low interest rates fueled the sellers' market. Inventory levels were low, buyer demand was high, and home prices saw increases of 10-20% in major markets.
But what goes up eventually comes down. Inventory is still low but mortgages are now high relative to the historic lows we have experienced in recent years. However, mortgage rates aren't high when looking at the last 50 years of data. And this has prospective home buyers wanting to strike while the iron is hot. As we see inflation rise, the Fed is likely to keep edging up interest rates and the cost of borrowing money gets more expensive.
On a microlevel, we have seen some changes. We believe the peak of the market (when the most contracts were being accepted) was in mid-May. While we still are receiving more deals on average each week this year than last, the weekly number of new deals is softening.
How the Changes affect Buyers:
While inventory is still low, sellers are not being as greedy. A month ago, more than 50% of our deals were As-Is, benefiting the seller. This percentage has sharply dropped. This might give buyers the opportunity to protect themselves more than they could have earlier this year.
If you feel like you will be in this home for less than 7 to 10 years, you might want to explore an adjustable arm mortgage. You will get a better rate and always have the option to refinance if you choose to stay longer or rates drop. This will give you more buying power now. (If you need referrals for great mortgage brokers, reach out to our office).
Experts are predicting more inventory will come on the market as we enter the fall market.
Home prices are expected to stabilize (not decrease) soon.
How the Changes affect Sellers:
Homes are not sitting on the market very long. With inventory low, you are likely to get a lot of action quickly.
Home prices are still up from last year and increasing. This is a good time to sell before home prices flatten, as predicted.
There is still pent up demand and buyers are more willing to agree to better terms now. As inventory goes up, your selling power will decrease.
So yes, the market is shifting. But one thing holds constant. People will always need to buy houses whether for jobs, schools, or family and people will always need to sell for reasons of their own. Arming your sell with a sharp real estate agent, mortgage broker, and real estate attorney will keep you protected in these uncertain times.
Pictured above is David’s family and their new puppy Rocky Lee Frank.