Hi! Welcome back to #FabulousFriday! The wild real estate rollercoaster we have been on for the last two years appears to be quieting down. It's interesting... because this new normalcy appears to be creating it's own form of real estate anxiety. But normal can be good for buyers, sellers and real estate professionals. However, many signs seem to indicate a recession is right around the corner. Many people feel recessions are bad, and that recessions are a reason to be fearful. It's true, no one likes recessions. But, this recession is a little more complicated by inflation.
And, here's the thing - when inflation goes up, the federal reserve tries to control it by increasing interest rates. That typically raises the interest rates on mortgages, which impacts the real estate world. When mortgage interest rates rise, that tends to depress the housing market. Then, mortgage loans become more expensive and rising rates impact how much a buyer can afford. But, on the flip side, recessions tend to push down interest rates for real estate. In fact, in the last six recessions mortgage rates have declined. All of these ups and downs can feel very volatile.
So, what does all of this mean? We know inflation pushes interest rates higher and recessions pull them down again. It's still anybody's guess, but early indications show inflation calming down and interest rates dropping again. Next, there's the housing inventory. It is still low, but it is on the upswing. Increasing inventory is good for buyers because it means there is a greater supply, which tends to drive home prices down. Those who were scared off during the housing boom over the last two years might re-enter the market if inventories continue to climb. The media may be reporting potential market crashes - which can make for good headlines, but the numbers don't support those conclusions.
If the new normal for the real estate market looks like the old, pre-pandemic normal real estate market, there is great encouragement in the current numbers. Homes prices are still appreciating. Sales are still strong. For the moment, interest rates have stopped climbing and may have plateaued. If you are a seller, offers are still coming in strong. While the over-asking price sales have dropped a bit, in many markets it's still 50%.
In fact, according to Jessica Lautz, NAR's Vice President of demographics and behavioral insight reported the following facts:
1) Median days on market for homes nationwide hit a record low of 14.
2) The average number of offers per property dipped to 3 from a previous high of 5.
3) Approximately 30% of buyers are waiving inspection and appraisal contingencies.
4) All cash buyers currently stands at 25%. This number has decreased from a high of 35% in 2014.
5) First-time buyers are still being side-lined and make up approximately 30% of the market. Historically, they make up around 40% of the market.
This could all be good news for buyers, sellers and real estate professionals. At Shaffer Realty and Shaffer Real Estate-we are here to help you navigate the current real estate marketplace. To gain more insight, get in touch with one of our professional helpful agents today. See you next Friday for more real estate tips and tricks. Warmly, Susan