For the past six years, we went through an aggressive seller’s market, and prices appreciated significantly during that time. Now, though, the market is stabilizing, and that’s good news for buyers.
If you’re thinking of buying a home, there are four points you need to remember when it comes to the state of our current market.
First, inventory is rising. In some areas, it’s increased by as much as 40%, which means you have more options to choose from. As inventory rises, demand falls. You’ll have more time to look at properties, more time to make a decision, and you won’t be competing against as many other buyers either.
Second, interest rates are slowly rising. What’s important to understand when taking out a mortgage loan to buy a home is that the home’s price is a one-time purchase, and what you’re actually buying is the interest rate. If you’d rather wait until next year to buy a home because the market is stabilizing and you think you’ll get a better price then, you may very well be able to do so. However, if rates jump from 5% to 5.5% in that time, you’ll end up spending more money per month for a home you bought for less. This is why it’s so important to talk to a lender during the home buying process so you can better understand how interest rates affect you.
Third, pending sale activity, or how many homes are selling in a monthly basis, is down 20% to 25%. Since inventory is rising, this means homes are taking longer to sell and fewer of them are selling. Again, this drop in demand means you’ll have longer to make a decision and a better chance of getting a good deal.
Lastly, think of your mindset. A lot of buyers out there are suffering from a sort of paralysis because they’re uncertain of what’s happening in the market. The previous five years, though, buyers were complaining about how there was no inventory, and how every time they found a beautiful home, there were 10 other buyers who wanted it too. Well, now they’ve got their wish—there are more homes available, they’re taking longer to sell, and better deals are out there.
In other words, look at this as an opportunity. Is it a good time to buy for everybody? Probably, not, but if you are thinking about buying, get in touch with a lender and a Realtor and analyze your situation, because you can potentially buy a great property at a great price while still securing a low interest rate.
As always, if you have any other questions about our market, don’t hesitate to reach out to me. I’d be glad to help you.