How higher mortgage interest rates are impacting our housing market.
By now, you probably know that interest rates are hovering around 8%. How is this development affecting the real estate landscape? As a seasoned real estate professional, I’ve been monitoring the shifts closely.
First and foremost, higher interest rates are softening the market. Contrary to the fears of a market crash, we’re experiencing more of a gentle deceleration. In practice, this means homes are lingering on the market for extended durations, price reductions are more common, and negotiations have more wiggle room.
One notable trend I’m witnessing is buyers requesting interest rate buydowns. Essentially, sellers are offering buyers credits to lower their interest rates for the first two years of the loan. Furthermore, buyers have become pickier. They scrutinize properties with a critical eye and approach home inspections with higher standards than when interest rates were lower.
For sellers, this shifting landscape just proves how important it is to price your home correctly. You’ll need to be more strategic and patient in this market; transactions may take a bit longer than before. It’s imperative to stay well-informed about market dynamics. While premium pricing was achievable during the market’s peak, the current climate features fewer buyers who aren’t as quick to submit full-price offers.
The rush of activity and multiple offers we saw earlier isn’t as common now. However, there’s a silver lining. By pricing your property competitively, slightly below the comparable values, you can attract more attention and potentially engage multiple buyers. This strategic pricing can still lead to competitive situations. However, when you remain on the market for an extended period, leveraging your pricing and negotiations can become more challenging.
That’s why it’s crucial to seek guidance from your broker to ensure your pricing strategy is positioned to generate activity. Also, monitoring the market is key. Sometimes, even if your pricing is competitive and inventory is low in your area, low buyer activity can be due to wider market trends.
As interest rates continue to hover around 8% and potentially inch higher, the market will remain in its current state. Should interest rates surpass the 8% threshold, the market may soften even further. That being said, we’re optimistic that rates may fall slightly in the near future. If you have questions about this topic or anything else, please call or email me. I am always willing to help.