As we step into the beautiful autumn season, it’s a great time to
provide you with an update on the latest trends and future
predictions for the housing market. We’ll delve
into many factors determining the real estate market. By
definitive metrics, the housing market is now in a recession. Many experts
feel this will include all sectors in the coming months
due to global issues that ultimately will have an effect on us. The
good news is that it is not expected to be very severe nor very
- Current Trends: Despite everything, the market is still robust. There
are many buyers evidenced by the fact that we still have multiple
offers on mainstream properties in our area. There is evidence that it is softening
just slightly as sellers are a little more negotiable and willing to do some repairs though.
Low inventory levels, pent up demand coupled with a growing population of millennials
and Gen X’ers determined to own their own home (some with parents help), are driving competition among buyers.
However, the inventory is starting to creep upwards and prices have started to level off a bit as of the past few weeks
- Recent Developments: The shift towards remote work has expanded the
geographical boundaries for potential homebuyers. Suburban and rural areas are
witnessing increased interest, while urban centers remain attractive for those seeking
proximity to amenities. Many are relocating to mid-America and the South where home
prices are considerably lower.
- Future Predictions: Experts anticipate sustained demand, especially in
suburban and rural markets. However, the continued lack of new housing starts over the
past several years has partially created the shortage we now are experiencing (starting
with the recession of 2008, it has continued through today).
Also institutional investors buying up 13% of available homes
has not helped. The severity of this shortage will not be made up easily.
2. Interest Rates
- Current Trends: Interest rates had been at historic lows for some
time due to government intervention. This low rate has spoiled many buyers who are
now disenchanted, hesitant and/or priced out of the market. At close to 8%’s now, it is
keeping many sellers from selling and having to get higher mortgage rates
on their next home, creating even lower inventory.
- Recent Developments: Buyers are starting to hesitate on
purchasing due to higher rates, causing inventory to rise slightly and
prices to soften a bit.
- Future Predictions:
Mortgage rates are poised to tick up slightly to 8% or more soon, according
to experts. This will price many buyers out of the market and may affect
the purchase of multi-family units as investors will not be attracted to them
unless prices are reduced to reasonable cap rates. Lenders are also starting to shy away
From multi-family loans.
- Current Trends: Affordability challenges persist, particularly in
high-demand markets. Rising home prices have outpaced wage growth for
many, leading to concerns about homeownership accessibility. Parents
are stepping in to help with gifting down payments, etc. so that the
younger buyers can break into the high costs of homeownership. Many
people are also deciding to just wait it out for now hoping that in the
coming months or years the interest rates may drop. If prices continue to
rise due to demand and shortages, however, this may not increase their
affordability as hoped.
- Recent Developments: Local and state governments are
implementing various initiatives to address affordability issues, such as
first-time homebuyer incentives and affordable housing programs. There
are incentives for building lower cost housing such as condos and new developments
have requirements to be designed with smaller lots to increase infill. Also the
Feds just lowered the down payment requirements for owner-occupied
multi-family purchases so these are more accessible.
- Future Predictions: Affordability is expected to remain a critical
issue, especially in densely populated metropolitan areas. Buyers may
need to explore different financing options or consider other emerging
markets to find more affordable housing solutions.
In conclusion, the housing market is likely to continue to experience a shortage of
homes for many years to come which will affect homebuyer affordability.
As always, we are here to assist you with any questions or real estate needs you may
have. Please don’t hesitate to reach out to us for personalized advice and guidance.
Thank you for entrusting our team as your real estate partners. Wishing you a wonderful Fall