A Slowdown in the Housing Market

September 29, 2023

A Slowdown in the Housing Market

A Slowdown in the Housing Market

As we step into the current landscape of the real estate market, it's evident that things have slowed down, with prospective buyers showing caution in the face of climbing interest rates. However, there's an intriguing twist to this narrative: despite the overall deceleration, exceptional properties continue to fly off the market at astonishing speeds. Much of our recent transactions are occurring off-market, demonstrating the agility of both buyers and sellers in adapting to this new environment. On one side, we still see a strong presence of cash buyers actively searching for their dream homes, while on the other, a growing pool of buyers is keenly seeking opportunities for deals. Among them are year-end buyers, strategically positioning themselves for tax advantages in their property acquisitions. Undoubtedly, the real estate landscape is challenging, but we take pride in our ability to navigate it adeptly, guiding our clients towards success in these dynamic times.

For help with all your real estate needs, don't hesitate to reach out to us!

Advice: Who's Market Is It Anyway?

Are we currently in a Buyer's Market or a Seller's Market? Or are we in a “Nobody’s Marker?” There does not appear to be a definitive answer, and the opinion may change depending on which location and price point you are in. The two main factors affecting the market are, as you have guessed, “high interest rates” and “low inventory.”

Because interest rates have skyrocketed (up to 7.31% for 30-year fixed which is the highest in 23 years), borrowers have lost tremendous buying power since the middle of the pandemic. In that sense, homes and monthly payments are much more expensive now than they were just 1 to 2 years ago.

Thus, those buyers that do not require a large loan to purchase (i.e., cash buyers) are in a prime position to strike a good deal on a home. They will be much more appealing to sellers since they are more likely to be able to complete a purchase without issues. For these buyers, it can be a buyer’s market because they can get homes for much less than what the sellers are asking.

Since interest rates are 2 to 3 times as high as in previous years, it is extremely unfavorable for current homeowners to sell their homes and give up their low interest rates. Even if they sold their home and bought another home for the same exact price, their mortgage payments would be significantly more expensive. This reality is preventing potential sellers from selling which leads to there being very little inventory available. If a seller does decide to sell and if they have a unique and highly desirable property, then it is possible for them to get top dollar, for buyers’ fear of missing out.

Unfortunately, for homes that are not too unique or desirable, affordability does become a major issue, so these homes may have a tough time selling unless their sales prices drop to a point where it can offset the higher interest rates. Luckily for sellers, the low inventory is currently having a major effect and is keeping the home prices from going into a free fall.

It is mixed right now whether the market favors buyers or sellers. Depending on the location and price point, we can help you to better answer that question.

Read our September Newsletter Here

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