In today’s real estate market, there are several key factors at play that both buyers and sellers should be aware of. Allow us to break down some of the real estate challenges we’re currently navigating:
Interest Rates on the Rise
We’ve had the luxury of enjoying historically low interest rates for over 20 years. While that’s been fantastic for buyers, we’re seeing a significant uptick. Buyers struggle with locking in lower rates. Sellers should be aware that higher rates could slightly dampen buyer enthusiasm.
Inventory Crunch
One of the most significant real estate challenges we’re grappling with nationally is a lack of available homes. Sellers are in a favorable position due to this low inventory, but the downside is that it’s driving prices upward, causing some buyers to pause their search or extend their timelines.
Affordability Concerns
The combination of rising interest rates and low inventory has led to questions about housing affordability. Buyers, especially those entering the market for the first time, may find themselves priced out or limited in their choices. What you could buy 18 months ago you may not be able to afford now.
According to the National Association of Realtors, the average monthly mortgage (based on average 30-year mortgage rates and home prices) rose 85% in the past 20 months, from $1,212 in January 2022 to $2,243 in August 2023.
Economic Uncertainty
With ongoing situations like the pandemic and geopolitical tensions, there’s a sense of uncertainty in the air. Both buyers and sellers are exercising caution, which has resulted in fewer transactions than we’re accustomed to.
Stricter Lending Standards
Some financial institutions are tightening their belts when it comes to mortgage qualifications. This can be a stumbling block for buyers who may not have a substantial down payment or sterling credit history.
At a July 26 news conference, Fed Chair Jerome Powell said he expected the loan survey to be “consistent with what you would expect. You’ve got lending conditions tight and getting a little tighter, you’ve got weak demand and, you know, it gives a picture of pretty tight credit conditions in the economy.”
Legislative Impact
Finally, changes in government policies, like potential tax reforms, can introduce another layer of complexity to real estate transactions. Those considering selling investment properties should pay close attention to any proposed changes in capital gains taxes.
Contact Us
By understanding these real estate challenges, we can better strategize and make well-informed decisions whether you’re looking to buy or sell. Our goal is to guide you through this ever-changing landscape successfully. Let’s discuss how these factors might directly impact your real estate goals.
Marilyn Tucker
