All year, we’ve been hearing themes in the news like “prices are going up,” “seller’s market,” “buyer demand,” “low inventory,” and so on. All of these signals seem to indicate that it’s a really good time to sell your home.
However, there are a couple factors that could disrupt this trajectory for those looking to buy or sell a home:
1. Mortgage rates have hit a seven-year high. Several weeks ago, the 30-year fixed-rate mortgage interest rate increase to 4.6%, the highest it’s been since 2011. This follows the same trajectory that we’ve seen over the course of the past year regarding increasing mortgage rates. Interestingly, mortgage applications spiked in September; this typically indicates that buyers think the rates will continue to go up, and based on other economic factors, we also predict that’s the case.
“A spike in mortgage applications typically indicates that buyers think the rates will continue to go up, and based on other economic factors, we also predict that’s the case.”
2. Affordability is dropping and buyer demand may follow. For someone who has a fixed monthly budget for their housing expenses, as housing prices and interest rates continue to rise, their buying power decreases. Where they were once able to buy a $250,000 home, they may no longer be able to afford that much anymore. If you’re trying to capitalize and get top dollar for your home, the time is now.
3. More and more home sellers are reducing their prices. With the seasonality of our market, it’s to be expected that prices will come down in the late fall and into the winter. However, the combination of increased interest, decreased affordability, decreased demand, and sustained high prices is leading to what we would expect to see: a more dramatic decrease in values.
So what should we take away from this?
If you’re thinking about selling your home, you really shouldn’t wait to list. We can’t tell what’s going to happen over the next six months, so the time to act is now. For homebuyers, bear in mind that as those mortgage interest rates continue to rise, your buying power may decrease, so you should also consider acting quickly. Plus, who wouldn’t want to get into a new home before the new year?
If you have any questions about buying or selling in the current housing conditions we’re experiencing, feel free to give me a call.