Some have said the real estate market has been like a crazy roller coaster ride since the pandemic, but I like to describe it more like a sailboat. When the winds change, it’s time to adjust the sails. Or course, with the current economy, inflation and mortgage rates increasing, what is a buyer and seller to do?
Let’s go back to 1982, the interest rate was 18% and this high interest rate caused a lot of chaos in the housing market. Buyers just couldn’t afford to purchase a home at these high rates. Fast forward to the crash in 2008, banks offered loans to almost everyone, even those who weren’t creditworthy. When the housing market fell, many homeowners defaulted on their loans, leaving tons of foreclosures on the market. Now, we are currently experiencing the fastest rise in interest rates in 40 years.
We do know housing is ALWAYS needed. People still need three important elements in their lives: food, shelter and clothing. We have made it through the last 40 years, and we will make it through the next 40 years (by the way that will be the year 2062).
I recently sat down with Janet Beane, Manager of Howard Hanna, Elyria and asked her what her opinion was of the current shift in the market. She stated that buyers are getting more of a “chance” to get their offers accepted. Sellers are now interested in accepting FHA and VA loans, as well as accepting offers with contingencies,(provisions for unforeseen events or circumstances). The main contingency I have seen is the buyer having to sell their home prior to purchasing a new one. Janet also continued that the market is now beginning to return to a “normal” market. Interest rates were great at 3% but just above 5-7% is more realistic.
I believe seller’s still believe it’s “last years” market with overpricing their homes in anticipation to receive inflated offers $20,000 over asking; and buyer’s now believe it's “next years” market thinking there is going to be a crash. We, as professional real estate agents, help them find the reality of the market. Instead of homes being sold within hours or a few days, we are seeing homes listed for longer periods (of course, depending on location and type of home). Some sellers are still listing their homes at a higher price only to find them placing a price reduction within the first couple of weeks after listing it on the market.
Basically, you should be prepared when buying a home. Here are 3 recommendations for the prospective home buyer.
1. Get your pre-approval, this will give you a starting point on a budget, down payment and closing fees; 2. Connect with an agent to get placed on an automatic home search. You can add filters with specific needs (such as style, location and preferences); 3. Have a conversation with your real estate agent about how much time you’ll need to find a home. That way when your “dream home” hits the market, you will be ready to make a smart, affordable offer.
Sellers should also make sure their home is priced appropriately. I recommend that you have your real estate agent prepare a home valuation report of recently sold homes that are comparable to your home. Of course, it also makes a difference on the number of “upgrades” that you have done to your home. There are many ways to add value to your home such as a new roof, water tank, furnace, new windows, etc., so be sure to have a real estate agent physically tour your home to see all the hard work that you have done to get your home “show ready”.
To view my recent video conversation with Janet Beane, Manager of Howard Hanna, please feel free to join my weekly email blast. Sign up at www.stacypandy.com Thanks for reading, Stacy Pandy, Realtor, Howard Hanna.
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