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Consumers, Realtors, and lenders alike are asking the same question lately- what the heck is up with the real estate market? With interest rates going through what can only be described as a roller coaster ride, buyers and sellers have understandably been a bit confused. Buy and sell now or wait for more favorable conditions? So, where do things stand? Here is what we know.
1. Interest Rates are incredibly volatile right now. They are swinging as much as a half point over the course of 2 days. Earlier this week they were at the lowest point since April and they bounced back up again on Friday. When mortgage rates hit their peak in early June, buyers took a big time-out. As things have settled some, buyers are dipping their toes back into the market and we have seen some homes get multiple offers again this week as buyers push to get the more favorable rates.
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This chart is the 30 year fixed mortgage interest rate over the past year.
2. Inflation is uncertain at the moment. We need inflation to come down before rates will stabilize. The Fed has indicated they will continue to raise rates until inflation calms. Until we see indications of that, we may be in for a bit of a bumpy ride as the market ebbs and flows.
3. Uncertainty rules in the local housing market at the moment. Some national headlines have made it seem like the market is "crashing." This is simply not the case. In fact, in our area, we continue to be operating in a seller's market due to low inventory levels of both single family homes and multi-family homes. However with so many mixed signals, buyers, sellers and industry professionals are unsure of what the right moves are at the moment. No one feels confident that they know where we are likely to go from here. For the housing market, along with many other industries, a clear path forward hinges on a clear understanding of what will happen with inflation.
4. We expect for the rest of the year to be a bit hit or miss. If things continue as they are, some homes will garner multiple offers and sell for above the list price. Others will stay on the market longer before going under contract with a buyer. It may be that housing values level off or maybe lose a few more percent (we are currently 5-10% off the astonishing highs of this spring) as we move into the winter months. Time will tell. Sellers should continue to prep their homes really well for sale and buyers should look for the unique opportunities this kind of market can bring. Some buyers, lucky enough to lock in their interest rate on the right day, will enjoy a mortgage rate in the mid 4's.
5. As home buyers are pushed out of the purchase market due to higher interest rates, rents will likely continue to rise. We are already hearing about a new wave of rising rental rates as demand pushes into that sector.
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This chart from rental company Zumper shows a 22% increase year-over-year for Denver 2 bedroom rentals. What are your thoughts about the housing market? We'd love to hear from you! Reach out and let us know what you think or if you have any questions. Until next time! Allison and Ken |
