As we close out the first half of 2022 and celebrate our Great Nation’s Independence, let’s take a moment to be take a look back on the wild ride that has been this year so far. We started the year off with low housing inventory, and interest rates in the low 3% range. Demand surged as buyers looked to get ahead of the highly anticipated interest rate hikes, and many properties were selling 10-20% over the list price with multiple offers. Fast forward to today, and we are still in a seller’s market, but buyer demand has cooled, as was the intention with the fed raising interest rates, and mortgages are in the high 4% range for well qualified buyers. Properties are still selling, but instead of 7 days on the market, most are selling in 14-21 days, and with 2 or 3 offers instead of 8-10. Does this mean we are looking at a crash in real estate? From my experience and research, I would surmise that there is a low probability of that happening. If anything, seller’s have less incentive to sell, and buyers who are currently paying rents, are still highly motivated to get ahead of further rate hikes, and likely rent hikes.
What should you do?
If you are a buyer, I would urge a sense of patience. With fewer buyers to compete against, look for properties that are sitting on the market for a couple weeks or more and don’t be afraid to write an offer. Real sellers will be eager to negotiate. If you are looking for a trophy property or have all cash, then you don’t need me to tell you that when the right one hits the market, you still need to move quickly and have all your ducks in a row. If you are a seller, pricing strategy is more important than ever. If you under price your house thinking you will have multiple offers, you may be leaving money on the table if you don’t have a bidding war. On the other hand, if you over price your property, you may end up chasing the market down as buyers lose buying power if mortgage rates continue to climb. If you are an investor, this may be a great time to look to diversify from volatile equities and buy a quality residential income property as rents are forecast to rise as much as 10% annually in the next couple of years.
As the market finds its footing in an environment with upward pressure on interest rates and slowly increasing inventory, it’s time to focus on fundamentals. Buy a property you can afford and don’t over extend yourself. If you don’t have any plans to move, then it’s a good time to enjoy what you have and be grateful you live in a place as good as the USA!
Is Now a Good Time to Buy or Sell Real Estate?
