Mortgage rates are going up which changes the affordability for buyers. So what does that mean for the growth of home prices? With buyers lacking affordability we often see what we call a shift in the market. Housing experts expect prices to begin to flatten or dip during this year. As the rates continue to go up the market will most likely slow down and adjust.
“The housing market will cool down,” predicts NAR’s Yun. “Buyers can simply not get a mortgage at these rates.”
One thing to keep in mind though is there is still a shortage of homes on the market. That means that although rates are rising there are still buyers out there with needs. Sellers need to keep a pulse on the current market trends in their area. Meeting with a real estate agent and asking what they are seeing in the market is key. At times I can literally see a shift within the week or month. The time of year can make a difference as well. Are you selling in the Spring, in August, in the Fall?
Some good news even with an adjustment sellers are very aware of what their neighbors are getting for their homes and will still be able to take advantage of the higher prices created over the past year. We are still seeing multiple offers in NOVA but this may slow down with time, maybe even in the next three or four months. For now, it is still an excellent time to sell. Investors may also keep the market strong since they do not need to take out mortgages and can often pay with cash.
The trick will be to marry the sellers expectations with the buyers affordability. Buyers are only as strong as their financials. For now, it is important to keep in mind that yes rates have gone up and gone up quickly but years ago they were at 18% so it is all relative to what we have been used to. Real estate is still an excellent investment in your future.