No Slowing Soaring Home Prices
There is a joke amongst real estate agents that you need to check on your friends who are buyer’s agents because they are not okay. The real estate market has been red hot, but home sellers and their real estate agents have been having all the fun. It has been a sellers market. Home buyer demand has been through the roof and the inventory of homes for sale has not been able to keep up. As such, home sellers have had all the leverage and home prices have gone through the roof. It’s hard for home buyers, so it is easy to understand why some home buyers are hoping for a downturn. Home buyers want home prices to decline and give them back some leverage in the real estate market. Unfortunately, you should not expect this downturn anytime soon. Do not expect home prices to decrease in the near future.
Home Prices are Soaring
In nearly every market in the United States, home prices are soaring. Some experts predicted that home prices would not rise as much as they did in 2021, but this year is already proving experts wrong. In January, home prices increased at a far faster rate than anyone had expected. The jump in home prices especially shocked real estate watchers because it happened in spite of rising mortgage rates. It seems like higher mortgage payments are not deterring would-be home buyers and sellers are still able to get top dollar for their houses.
Mortgage Rates Rising, But Remain Relatively Low
During the pandemic mortgage rates bottomed out to historic lows as the Federal Reserve slashed interest rates to protect the economy. We are not fully done with the pandemic, but the pandemic discounts on mortgage rates are long gone. Just this past week we saw mortgage rates creep up to about 5 percent. This is a huge difference from the sub-3 percent mortgage rates we were seeing about a year ago. However, anyone waiting for today’s rates to deter home buyers should think twice. Today’s mortgage rates are higher than pandemic lows, but they are still low compared to historic rates. Mortgage rates could rise a lot more and still be a good value comopared to other eras of rates for home loans.
Home Inventory Remains Low
The past week is showing some positives in terms of home inventory, as inventory numbers bounced a bit on 2022 lows. This could mean that inventory numbers have seen a yearly bottom and there might be more houses hitting the market for the rest of the year. That would be incredible for home buyers. The best hope home buyers have to temper the red hot rise of home prices is an increase in supply. Today’s mortgage rates are still at a discount compared to other decades, so demand is not going anywhere. That is why we need to hope that inventory starts to pick up and eventually meets up with demand. Unfortunately, it will be a long time before that happens.
Some were even morbidly hoping that a wave of foreclosures would bring home buyers the inventory they desire. But, that will not happen. Thankfully, serious delinquencies on mortgage payments are continuing to see large declines. The truth is that today’s real estate market is healthy, even if it is really expensive, and home buyers need to embrace this reality. A sudden influx of inventory is not going to happen out of nowhere. Today’s market is hard for home buyers and home buyers need to prepare for it.
Final Thoughts
Today’s market can be discouraging for home buyers who keep watching the house of their dreams sell for more than they could have ever imagined. Unfortunately, this scenario is not going to change anytime soon. Home prices are going to continue to rise and hoping they will do anything different is a fool’s errand. Instead of crossing your fingers and hoping for a market crash, work with a team of professionals and get a plan.
Buying a house is difficult right now, but it is not impossible. Working with a professional real estate agent and a professional mortgage broker can give you the advantage you need to get you the house you want. The truth is that home buyers are still able to make it to the closing table. It just takes some extra work and determination. Work with a real estate agent who will come with the grit and guile you need. If tired of getting beat by today’s market and you’re ready to get tough, contact us. The team at Streamline Realty is here to dig in and help you make your dreams a reality.
