The market seems to be reaching a tipping point. While home prices are still climbing nationally, the increased mortgage costs have also pushed some buyers out of the market. National home sales fell 2.7% in March, and mortgage applications dropped 5% in mid-April. The main reason is the sharp rise in interest rates, which have hit an average of 5.35% nationally, which is a 2% increase from a year ago. Interest rates may not affect you as a home seller, but as Lawrence Yun, chief economist at the National Association of Realtors states, “May buyers will be forced out of the market because of the hit to affordability from rising interest rates.” That could impact the number of multiple offer situations and lead to increased days on the market.
However, it’s not all “doom and gloom.” While increased interest rates are causing a dip in buyer demand, home inventory is still scarce. Redfin’s chief economist, Daryl Fairweather, also notes that while this increase is slowing demand, “it also appears to be discouraging some homeowners from selling. With demand and supply both slipping, the market isn’t likely to flip from a seller’s market to a buyer’s market anytime soon.”
Home prices are still expected to increase throughout 2022. Zillow predicts that annual home price appreciation will “continue to accelerate through the spring, peaking at 22% before gradually slowing to 17.8% by February 2023.” The increased mortgage rates will likely slow home price growth, but every major real estate firm still expects home prices to grow this year.
You may be wondering how inflation and our general economic situation play into this. While inflation is hitting the average consumer hard, and some worry we may see a recession in 2023, the real estate market is expected to remain strong. Interest rates are slowing down buyer activity, but that won’t likely be enough to cause a crash.
Prior to the crash of 2008, the real estate market had already experienced a significant downturn. We’re not seeing that today. May are looking to the real estate market to lessen the impact of a possible recession in 2023.
Overall, it is still a fantastic market in which to sell your home. Prices have never been better and while higher interest rates may make it harder to buy, there are plenty of strategies that can help you find a new home and make the whole process smoother. The market projections are positive, but the future is uncertain, so this may be your last chance to sell your home for top dollar before rates climb more and price more buyers out of the market.
If you’re curious about what your home would sell for in today’s market, contact Penny at (206) 618-5123 or email me at Penny@TheOriginalPenny.com. Let me know how I can help with your real estate needs.
Serving: Bainbridge Island, Poulsbo, Silverdale, Kingston, Bremerton, Port Orchard, Port Ludlow and Ocean Shores.