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Ever since interest rates decreased at the beginning of the pandemic, it has been a sellers market in real estate. With low interest rates, buyers took the opportunity to buy homes and secure mortgages at these low rates. Competition for homes has increased significantly along with prices, sales continue to be brisk, and inventory remains low. However, market conditions may be changing in the near future.
Home Buyers
Over the past few months, interest rates have been steadily increasing. While rates averaged around 3% at the end of 2021, they have since increased to an average of 5% at the end of May. Additional increases are planned by the Feds. Despite the sea of potential buyers on the market, the higher interest rates have some of them postponing their home purchase which is allowing the market to move towards some stability.
Home values rose by upwards of 20% over the course of 2021, which means that buying a home today is more expensive than it was just a year ago. Yet, the increased competition for homes has made multiple offers on homes the norm, making it difficult for many buyers’ to have their offer accepted. As demand decreases among buyers, home inventory will begin to increase and purchasing a home may become easier.
In general, housing demand is expected to still be strong and inventory to be relatively low. But, the market won’t be as intense as it was in 2021. Home prices are expected to rise this year but shouldn’t come close to the 20% increase that occurred in 2021.
Home Sellers
If you’re looking to sell your home, the housing market still favors sellers who hold negotiating power. There may not be a lengthy bidding war when you list your home on the market, though. If you want your home to be sold without delay, perform any necessary upgrades and repairs before putting it on the market.
It is unlikely that the housing market will shift completely to favoring buyers. Yet, it’s increasingly likely that the market will become more balanced over the next year or so. A balanced market is great for buyers and sellers alike.
