How rising interest rates impact distressed sellers and the market.
What happens if you can’t pay your mortgage? Today I’ll discuss the potential ramifications for homeowners facing financial constraints in meeting their mortgage obligations, and also provide valuable insights into homeowners’ equity standings and strategic approaches amidst the evolving dynamics of the housing market.
It’s becoming common for individuals to sell their properties within a year or two due to various reasons such as job relocation, financial changes, or personal preferences. With the current market showcasing increased interest rates and payments, renting out the property might not be financially viable for many. Additionally, some homeowners prefer not to take on the responsibilities of being landlords.
Comparing the current housing market to the 2008 crash reveals notable differences. Back then, fewer than 50% of homeowners had equity, while now it’s 58% or higher. Moreover, in 2008, people often secured loans that weren’t suitable for them, contributing to a significant market collapse. This differs from today, where people generally hold more equity and have obtained better-suited loans.
The market conditions have shifted drastically. In the past, buyers had numerous options within their price range, sometimes overwhelming choices. Contrastingly, today’s low inventory means fewer options are available, emphasizing affordability as a primary concern.
Though unforeseen financial challenges can still arise, most homeowners seem to have substantial equity in their properties, making them well-positioned to sell if needed. While some recent buyers had to pay well above listing prices, they secured lower interest rates and possessed good equity, offering them more flexibility if they needed to sell sooner than planned.
The bottom line is that currently, distressed sellers aren’t prevalent. If anyone needs guidance on evaluating their equity or requires strategic advice for selling their property, call or email me for assistance.