Here’s a look at what the future might hold for our housing market.
Right now, we’re used to being in a scaldingly hot seller’s market. If you put a home on the market, you’re going to get multiple offers and receive more than your asking price. And due to fierce competition, buyers are doing everything they can to get their offers noticed and accepted.
What goes up must come down, however, and the market may soon begin to normalize somewhat. I’m not talking about things turning into a buyer’s market, but we do anticipate a shift in the near future. There are a few reasons why.
Inventory is still historically low, but more homes begin to come onto the market for the spring selling season in April, May, June, and July. Even now, we’re seeing more and more listings pop up. When inventory increases, demand usually decreases a bit.
Additionally, interest rates are beginning to rise. We’ve enjoyed incredibly low interest rates of around 2.5% for a while, but they’re now closer to about 3.25%. When rates go up a half percent, affordability falls by approximately 6%, so these increases have forced some buyers out of the market. As rates continue to rise, more and more buyers will have to drop out. As a result, supply will likely increase and demand will decrease.
Interest rates change with world conditions, meaning that as things become more certain, rates increase. We’ve had stimulus checks, business openings, a better economy, vaccines, and more of a general return to normalcy. Since things are mostly improving, interest rates will likely settle around 3.5% to 4% by the end of the year.
With more homes on the housing market and higher interest rates, buyers are going to have more options to choose from. Sellers will need to be extra careful when it comes to pricing their homes, as there simply won’t be the same level of competition and demand among buyers. Buyers will be able to be a bit pickier when looking at homes, so you’ll need to price yours effectively.
Don’t let the last few months determine how you price your home going forward. Your price is essentially the bait—if you price your home too high, you’ll scare a lot of potential buyers away. However, even if you think you know what your home should be priced at, it’s always in your best interest to work with a seasoned professional when selling.
You want a Realtor who has worked through the drastic changes that occur within the market, as they understand how to gauge what buyers are looking for and how you can appeal to them. By knowing the market, your agent can help you secure top dollar on your sale and get as many eyes on your listing as possible. If you’re thinking about listing your property or have any questions about our housing market, feel free to reach out to us. We’d be happy to help you with any and all of your real estate needs.