It’s true when they say that no one can ever really time the housing market. So we want to be upfront about the fact that we’re not here to tell you we have all the answers.
But what we are here to tell you, is that after examining historic market data, listening to respected real estate analysts, and taking account of several other existing contributing factors, the housing market is beginning to experience a shift. And it’s a shift that you’ll want to be aware of.
Shifts are hard because we often don’t recognize a shift is happening until it’s already happened. Hindsight is 20/20, you know? But when you are actively looking for the signs, it can be easier to identify and prepare yourself. In the past couple of months, we’ve seen several indicators, like the following below, that have already begun to impact the market. And we want to share those indicators with you -
- Mortgage rates are going up and are predicted to continue rising - Historically, the spike in interest rates slows down pricing. Potential buyers are not able to afford as much home, and seller must adjust if they are truly motivated to sell.
- Construction isn’t meeting demand - In the new home market, homebuilders are producing at full capacity. But they also face multiple challenges like labor shortage, high land prices, and municipal zoning, fees, and regulations. Additionally, much of construction has been focused on the higher-end market, which is now showing signs of stress. This causes the market to be split by price point. Entry-level homes may remain in a seller’s market, but some luxury and move-up markets show signs of shifting.
- Affordability is worsening - Due to stagnant income wage growth, the continued shortage in low-to-moderate-priced inventory, and rising mortgage rates, affordability continues to plague the market. This also stalls the market.
So, what can you do?
- If selling your home is inevitable, we recommend to do it as soon as possible. You will most likely make more money off the sale of your home now, than if you wait.
- But buyers, don’t start thinking, “Ok. I will just wait until next year and it will be a buyer’s market again!” Maybe it will, or maybe it won’t. It’s too early to tell. But regardless of it being a buyer’s market or a seller’s market, the gift of today’s market is that interest rates are at or below 4 percent. This is an incredible opportunity to leverage yourself with historically low rates.
- And if you can’t move up your purchase date, don’t panic! But do need to take action to mitigate rising increase rates and affordability challenges. The actions you can take right now is to increase your savings in order to put more money down or increase the equity you have in your existing home.
We really don’t want to be the ones running around saying, “The sky is falling!” But because we love our clients, we’d rather you be aware and cautious, than regretful in the future.
We’re going to keep an eye on this issue for the next couple of months and promise to keep you informed. If you have further questions or would like to discuss the state of the market, give a BHURDinUtah agent a call today!