We know the news surrounding the real estate market lately has been a bit baffling, and maybe a bit scary. We want to help you make sense of it. Here are some highlights from a recent New York Times article.
So, what to expect going forward?
- Rising mortgage rates this spring put a damper on people’s buying power, even though rates around 5% are historically still fairly low (see the chart below for context).
- Bidding wars became not as frequent of an occurrence.
- Mortgage applications were down 24%, and pending sales fell 13% from the same time a year earlier, the largest drop since May 2020, according to Redfin.
- Inventory is still low (it increased by almost 19% in June over a year ago), and there are more people who want homes than there are homes available.
Of course, each person’s situation is different. Give me a call or email me back to talk about your specific needs. We’ll help you get there. We’re here for you in all kinds of markets.
- Prices are unlikely to drastically drop. Realtor.com is projecting a modest 6.6% price increase for 2022.
- It’s still a seller’s market. In May, the median price of a home in the United States passed $400,000 for the first time, according to the National Association of Realtors.
- The low rates of 2020 and 2021 weren’t entirely positive. They helped home prices spiral. Soon, buyers may be in a better position than they have been in a while.
- The market could return to one that resembles a prepandemic normal, with homes that take a few months to sell and prices that gradually increase. Buyers may be able to start making a few reasonable demands — for things like appraisals, inspections and mortgage contingencies.
- Sellers should adjust expectations. Your home may sit on the market for a few weeks and, if priced well, sell for around the asking price — which is still a good situation.
- Those planning to sell in the next year would be better off doing it sooner rather than later. But if you can wait until the market settles into a new rhythm, you may have a better sense of what to expect.
- If you sell now and plan to buy, you may be trading a low mortgage rate for a higher one.