As a home buyer, if you are new to the market, you're probably filled with trepidation and dread about multiple offers and bidding wars, and if you've been in the market for a while you're probably a bit worn out from seeing homes, making offers, and getting outbid.
Everybody has an opinion of what's going to happen with the market and they are all different, so it's really confusing. Is there going to be a crash? Is there not going to be a crash? Are prices going to continue to go up at an insane rate, or will prices come down as interest rates rise? After all, lots of people have said that was going to happen. And you don't quite know what to think or who to listen to. You get the picture.
And you are right to be confused.
So while I don't have a crystal ball or the winning lottery numbers, I have talked to and listened to a lot of very smart people, and I have studied the market intently for the last 10 years, so here is my opinion of what will happen with our real estate market as we come into summer 2022.
Prices will continue to rise.
Yes, that's what I said. They will continue to rise at a normal rate of 7-9% per year, rather than the breakneck insane 20-25% that we have seen as of late. This will be the effect that rising interest rates have on home pricing, rather than causing prices to start decreasing.
And all of you waiting for a real estate crash, here's my spoiler alert: I don't think it's coming.
The reason for why I think this is simple: While the market has been on a sharp rise, there is a lot of money in the market, and over the last 10 years, and even more so the last 2 years, people have had to be really well qualified with good income, a solid down payment, and great credit in order to buy a home. These people who were well qualified then probably still are, and have been living in their homes and seeing great gains in equity. These people are not walking away from their homes and getting foreclosed on.
Inventory levels will start to rise. This is the single biggest thing that will impact the market even more than interest rates. We will start to see some more homes coming to the market and new housing starts are very strong, meaning that builders are still building, and will continue to do so. We will also see more resale residential inventory coming to the market. This in conjunction with rising interest rates is what will stabilize pricing.
And we will still see multiple offers on the best homes! Yes, you read that right. It's my firm belief that for the foreseeable future we will still see multiple offers on the properties with the best conditions, located in the most desirable areas, and priced in alignment with the market.
The bottom line is that while the market will remain competitive for buyers, and we will still be in a seller's market, we will see more opportunity for buyers to get their offers accepted due to the increased inventory, as well as fewer buyers competing for homes after being priced out of the market due to rising interest rates.
Overall the market has a lot of opportunities for a buyer willing to keep their head down and work through the process.
If you're a buyer, and you would like to put together a step-by-step plan to get you into the right home for your family, please call us at 714-406-1414.