What's Happening in the Housing Market?

Okay, let’s all take a pause and have a calming moment. The real estate market has been complicated and difficult to navigate during the last couple of years.  It’s time for us to take a simple, realistic approach to today’s real estate marketplace.  Inventory levels remain at a record low, but home prices and interest rates are higher than two years ago. However, recent market conditions have been unrealistic and we are destined for an adjustment in these key market indicators. 

In some markets, home prices are stabilizing and have decreased minimally. However, there are still many homeowners sitting with mortgages under 4% and that will slow an inventory recovery.  Mortgage rates seem to be wavering 6-7% and are predicted to stay in that range.  These conditions can present opportunities for both buyers and sellers.  Although it is still considered to be a “seller’s market”, the environment is becoming more equitable.  Frankly, there is a lingering buyer-seller disconnect meaning that sellers are still hoping for last year’s prices and buyers are still making unrealistic lowball offers. 

Let’s also take a second to discuss the potential for a real estate market crash.  Current conditions indicate that we are heading for a significant market correction rather than the kind of crash experienced in 2008.  Most homeowners have equity in their homes due to recent inflated prices, in contrast to the 20-30% drop in prices experienced from 2008-2010.  In addition, mortgage products are less risky due to government regulation protecting the consumer from unsavory lending practices.  And finally, inventory levels remain limited and that will maintain a healthy and sustainable demand for homes. 

To summarize, many experts say that home shoppers have reason to be hopeful in 2023.  “Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year,” said Lawrence Yun, chief economist at NAR.  Others expect increased sales activity as home shoppers trickle back this year, eventually leading to a full-on housing market resurgence.  “It seems we have already reached the bottom of the low home sales activity,” says Nadia Evangelou, senior economist and director of forecasting for the NAR. “And with mortgage rates stabilizing near 6%, we expect the housing market to turn around in 2023 … and rebound in 2024.” 

Real estate opportunities are best found when you begin the journey with a trusted, professional agent.  Your success will be best defined by having a positive client experience; meaning a simple, end-to-end process that provides knowledge, advice, protection and the completion of your desired real estate transaction.  The client should only worry about finding the perfect home.  In any market, buying a home is a highly personal decision. It is critically important to define your homeowner needs and goals because homes represent the largest single purchase most people will make in their lifetime.  It is also crucial to be in a solid financial position before diving in.  Consult your agent to determine home affordability and use a mortgage calculator, based on down payment and interest rate, to determine monthly housing costs. 

The first step for a successful sale is to appoint a listing agent who knows the specific area well, and is prepared to provide all their resources and contacts to market the property.  A good agent will work closely with you to price your home competitively, while fielding questions and offers from prospective buyers.  Although everyone thinks their house is special, it is important not to overprice the home risking that appraisers and lenders may determine a different value resulting in the transaction falling through.  Even though the market may still be tipped in the seller’s favor, it’s in your best interest to present your home in the best possible light. Not everyone has cash dedicated to renovations and repairs, but a little sweat equity can go a long way. The first step is to declutter, organize and clean. Even if your home is outdated, a clean space gives buyers a chance to envision the house’s potential.

A sensible plan created by you and a qualified real estate agent will set forth a roadmap towards achieving your real estate goals.  The team at First Community Realty will provide a simple yet comprehensive process for you to follow that considers your needs and desires, and the requirements to complete a responsible transaction.  Give us a call and we will be happy to help and offer you the professional guidance needed to fulfill your home ownership dreams.