Housing Forecast with Madame Cross

How’s the market?

Is the equity in my home safe?

When is the best time to buy or sell a home?

As a homeowner or potential buyer, you may often find yourself pondering questions about the housing market. While we may wish for a crystal ball to provide us with all the answers, the reality is that understanding the future of the housing market requires a careful evaluation of the current situation and predictions for the future.

If you are considering making a move within the next 3 to 5 years, it is crucial to consult with a local real estate agent who can assess your personal circumstances and provide insights into what might be the best course of action for you. In this blog, we will delve into the current real estate market and explore predictions for its future trajectory.

In recent years, housing prices have experienced a significant surge, closely followed by rising interest rates. Currently, the market is facing a shortage of inventory for several reasons. Firstly, existing homeowners are reluctant to leave their homes due to low mortgage interest rates, which often hover around three percent. The ongoing pandemic has further exacerbated the issue, as construction projects were put on hold, limiting the availability of new homes. This shortfall in supply has not met the demand generated by new buyers entering the market. To put it in perspective, a healthy inventory level is typically around six months, but we currently only have two and a half months of inventory. Clearly, there is much ground to cover before we balance out this supply-demand imbalance.

You might be wondering how there can be such high buyer demand despite the current interest rates, which stand at around seven percent. The answer lies in the fact that many potential buyers are waiting on the sidelines for interest rates to decrease. However, there are also those who want to take advantage of the current home prices, fully aware that they can refinance their loans in the coming years to benefit from potential rate reductions. The key factor here is supply and demand. With countless buyers eagerly awaiting an interest rate drop, once it occurs, the influx of buyers into the market is likely to outstrip the available housing inventory. This, in turn, will spur a bidding war reminiscent of the pandemic era, driving home prices even higher.

If such a scenario unfolds, you might find yourself locked into a low interest rate but forced to pay hundreds of thousands of dollars over the asking price just to secure a home offer. In essence, while favorable interest rates might seem enticing, you could end up spending significantly more on a home should prices be bid up, as certain predictions suggest. On the other hand, purchasing a home now, while prices are still relatively stable, could prove to be more cost-effective in the long run, even if you plan to refinance later to obtain a lower mortgage rate.

To offer a breakdown of the implications for both buyers and sellers, it is essential to consider your specific circumstances. If you are a seller who also needs to purchase a home, the market dynamics will have a relative impact on your situation. However, overall, your financial outcome will likely be influenced by whether you save more on the buy side or the sell side, as you have to navigate both transactions. While competition may increase for buyers in the future, leading to higher prices, you may receive a slightly higher profit from the sale of your current home.

During the pandemic, we witnessed many sellers refraining from listing their properties due to concerns about finding a suitable home to purchase. Currently, there are more options available, and although multiple offers on homes are still prevalent, they are not as overwhelming as the 10 to 20 offers per home that we experienced during the height of the pandemic.

If you are a buyer worried about the interest rate, there are various strategies that a real estate agent can employ to assist you. These include negotiating seller credits to lower the rate, exploring options like a 2-1 buy-down loan (which offers a lower interest rate for the first two years, typically with refinancing in mind), or considering a five-year ARM (Adjustable Rate Mortgage) among other possibilities. Determining the best course of action requires analyzing your specific financial situation and goals.

For those seeking a deeper understanding of the current real estate market and its future prospects, our team has prepared a comprehensive PDF featuring expert graphs and data that reflect predictions for the housing market. While we cannot guarantee absolute accuracy, we believe this resource will provide valuable insights for you.

If you have any real estate plans or questions about the safety of the equity in your home, please feel free to comment or direct message us with the word “equity.” We will be more than happy to supply you with the aforementioned information.

In conclusion, the future of the housing market is a complex subject that requires careful analysis. By consulting with a knowledgeable real estate agent and considering your personal circumstances, you can make informed decisions about buying or selling a home. Whether you choose to act now or wait for interest rates to decrease, it ultimately boils down to your financial priorities and goals.

-The Cross Group, your Favorite Family Team,