Inflation is running rampant across the states. With the rising costs of transportation and rising mortgage rates, buyers are struggling to come up with the funds needed for a down payment on a home. Buyers are having to ask themselves if they should wait for the market to shift, or buy now while the rates are still relatively low. It’s a constant struggle for buyers and sellers to time their transactions right.
Here we’ll dive into the market to determine where it is now, where it will be, and when the right time is for your clients to buy or sell a home.
What are the most popular months to buy and sell a home?
Summer is usually the hot season for real estate professionals. According to the National Association of Realtors, the months of April to August are the most popular months for buying and selling, reaching peak season during the summer months. However, home prices have been consistently escalating and this summer has seen a huge slowdown for buyers because of this. Inventory is still low and the rates are expected to rise all the way up to 2024. Serious buyers need to know that because of these factors, now is the time to start looking. Buying now while rates are still relatively low is the best option and the rising rates are weeding out casual home shoppers, leaving more room in the market for serious shoppers.
Home Prices are Slowing Down With Inventory Increasing
On an optimistic note, we can look forward to a slower rise in pricing than we’ve been seeing in the last few months. This, partnered with a slightly larger inventory while the market starts to balance out, means that the market for buyers right now is better than it has been in a few years.
We can continue to see a lot of competition in the market, especially among investors looking to offer cash or buy quickly. The real estate market is moving fast and listings are often being sold as-is to avoid renovation costs. Wholesalers and investors can cash in on this market if they’re willing to put in the time and renovation expenses.
Rental Rates and Interest Rates are Increasing
MPA magazine reported in May that rental rates are going up four times as fast as the average income and combined with inflation, renters will be looking to own a home so they can invest in their own property and keep fixed rates.
If buyers want to keep rates and prices low, they’d better hurry and start shopping now. According to Forbes, experts are predicting that rates will rise to a whopping 7% on average by the end of 2022 from the current 5%. If buyers want to avoid skyrocketing rates and even higher prices, this summer is still the best time.
These trends are a sign that clients should also be looking to list their homes right away instead of hoping for prices to rise if they want to sell fast. Waiting until the end of 2022 means looking towards a very slow market. Mortgage rates will be higher than they’ve been since 2008 and we can expect to see a big increase in the average time homes sit in the MLS.
Now is the Time to List Your Clients’ Homes!
Sellers in smaller rural cities should also look to list right away before more people start heading back to work. Following COVID, the workforce is still primarily running their businesses from their own homes. A blog post from NerdWallet lists “more spacious and affordable choices for first-time home buyers” as some of the many reasons why people are relocating out of urban communities. With rising home costs and rental prices in the city, buyers will be looking to move from costly large cities to smaller towns where inflation hasn’t hit as hard and the costs of commuting aren’t as much of a factor when it comes to budgeting.
Condo and townhouse owners can be confident that their properties will sell quickly. It’s not just baby boomers looking to downsize, but city dwellers who are used to apartment living. These demographics will find comfort in complex living for a lower cost than owning a single-property home. Shared housing offers the affordability as well as the comfort of a fixed mortgage rate, without the many unpredictable factors that renting brings.
This Hot Market is Cooling Down Fast
Your clients shouldn’t wait to make their move and join the market. The end of the year is looking to be highly costly for both buyers and sellers. To avoid high-interest rates and a long time sitting with their listing on the market, right now, it’s the quicker the better. We’re still in a hot market, but it’s cooling down fast.