Whether you’re thinking of buying or selling a property in the United States right now, it’s difficult to understand how prices keep powering ahead while interest rates are on the rise.
Uncovering the answer is not small stakes.
For homeowners, it’s critical to how you might choose to manage your greatest financial asset and upgrade or downsize. Meanwhile, first-time buyers need to decide when to jump into the market at the most opportune time.
As an experienced agent in your neighborhood, I’m constantly asked to unpack the current market and predict when value growth might slow or stall.
Interest rates
There are a lot of pieces to this puzzle. Firstly, the Federal Reserve has pushed up interest rates in response to inflation hitting a 40-year high.
Mortgage rates are now sitting at around 5% – the most for a decade. Yet, average value growth continues at 20% a year nationally. While it remains a seller’s market, some pockets of the States are now seeing small declines.
Lack of supply
The bigger influence is a lack of supply. After a decade of under-building, too many buyers are now chasing too few homes across our great nation. This is probably why a recent Fed bog post noted: “House prices appear increasingly out of step with fundamentals”.
National Association of Realtors chief economist Lawrence Yun echoed the sentiment. He told CNN: “All the metrics related to income and affordability in housing appear out of sync, and the strange movement in the data is really caused by lack of supply. We need to get the inventory up.”
Property flipping
A couple of other dynamics are also in play. Investors are competing against first-time buyers for entry-level properties. That’s placing upward pressure on every market segment.
And the volume of home-flipping for a quick profit is getting scary. The number of homes flipped by investors last year rose 26% compared with 2020 numbers, according to industry researcher ATTOM Data Solutions. Even ‘mom and pop’ investors are playing this game.
If I can help you buy a property or sell your existing property, please do not hesitate to contact me. I’d be delighted to discuss my experience in negotiation and marketing to help deliver the next home of your dreams.