Here’s what buyers and sellers need to know about our housing market.
Today, I want to address a big issue—the recent surge in interest rates. Rates have climbed to around 7%, which is much higher than the 3% or 4% we saw last year. This shift has made buying homes less affordable, but people still find a way. There are a few unique strategies being used to maximize buyers’ purchasing power.
The first sign is the dwindling home inventory, reaching a nearly unprecedented low. It’s like scraping the bottom of a peanut butter jar; it can’t go any lower. Despite the already low inventory, as homeowners grow accustomed to the current rates, they will likely overcome the impact on affordability. This may lead to an increase in property listings, and we can expect the inventory to grow as we approach the new year.
Secondly, homes are selling at an accelerated pace compared to last year. Currently, properties are selling 20% to 30% faster year over year, driven by buyers who are adopting creative strategies to navigate these higher interest rates. Buyers are becoming more comfortable with the idea of buying at the current 7%, possibly exploring options to refinance in the next 12 to 18 months.
The third sign is the increase in negotiations. Despite low inventory and decreased affordability, well-priced and attractive homes are selling fast. However, for homes that don’t meet these criteria, buyers are finding ways to secure better deals through negotiations, either by obtaining the property at a more favorable price or negotiating higher credits to offset their monthly payments.
Whether interest rates are at 3% or 7%, homes are being sold daily. Ultimately, whether you are a buyer or a seller, if there is a strong motivation to move and the financial calculations align, it could be the right time. If you have any questions about this topic or real estate in general, please feel free to reach out by phone or email. We look forward to hearing from you!