As most of you are aware and are seeing in the media, the discussion on market rates going up is a daily conversation however most consumers are reading misinformed headlines about the housing market conditions in their respective markets.
The biggest misconception people are having is that the price corrections are extremely significant and crazy deals are out there which is in fact not true. A big portion of homes are seeing drops between 10-25% however majority of these properties were previously listed 10-20% over market valued and over inflated therefore the increment of 'market reduction' is actually more in the 5-10% for true market value. With 'correct' prices being more common and low inventory in the middle ground, we are still seeing a tight market in certain parts with buyers not being able to find what they are after, even after all the corrections and come downs.
“Seasonality plays an important role in the housing market, since it has an impact on housing demand and supply,” says Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS® (NAR). “Every year, transactions and prices tend to be above-trend in the summer, while activity typically slows down by the time winter comes. Activity in the last quarter typically drops by 15 percentage points from the third quarter. Nevertheless, I believe the market will remain competitive due to tight inventory.”
Expect no deviation from that pattern this year, says Dennis Shirshikov, head of content at the real estate investment site Awning. “The fourth quarter of 2022 looks like it’s going to be very similar to the traditional slowdown in most markets,” he says. “The only exception appears to be traditionally strong vacation rental markets, which have seen significant appreciation and resilience because of very low inventory levels.”
With rates creeping into the 7's, historically low inventory numbers and rental rates elevating we are seeing a very interesting time for homebuyers and home sellers with mixed feelings and trajectories as to their ownership plans.
Until we see a broad-based, sustained moderation in price pressures, the risk is that mortgage rates continue to climb,” says Greg McBride, Bankrate’s chief financial analyst. “But, at a point where inflation starts to slow in a material way and the economy is weakening, mortgage rates could have a sudden downdraft. Not sure if that happens by the end of the year or not, but it’s coming at some point.”
Tips for home buyers and home sellers in the current market.
With mortgage rates spiking out of the affordable range and home prices dropping — although not fast enough for many — plenty of buyers and sellers are unsure what their next move should be.
Pricing your home realistically is the number 1 direction sellers should be taking right now. The market is not what it was in April or May 2022 so pricing your home competitively is important always but especially right now. Well priced inventory is selling.
Any homeowners who are willing to stick it out until 'the right buyer comes along' may have their property sitting on market for the unforeseeable future.
Potential buyers, meanwhile, face a difficult choice: Postpone a purchase until prices plummet, or lock in a mortgage now before rates soar even higher?
Timing the market is always difficult and not recommended. There are many factors to consider however if you are in a strong financial position you may want to take advantage of lower priced inventory right now. You can always refinance your mortgage down the road when rates are more affordable.