Big Changes in Real Estate are Happening
As you might have already guessed, many leading indicators point to a shift in the real estate market. I want to share with you market information that might help you evaluate if it’s time for you to sell your home. Here are some of the facts that we are seeing and how they would impact you getting the maximum equity on your home.
- Interest rates WILL rise more in 2022 - Rates have gone from 3.3% this time last year to 5.57% (as of this writing this post; according to BankRate.com). Four hikes have been taken in 2022 so far, and more will be coming. Both sellers and buyers are impacted by rising rates. Affordability erodes as rates and mortgage payments rise.
- Inventory is low, yet buyers seem to be fatigued - In a survey by Fannie Mae, 80% of buyers do not think it’s a great time to buy. Part of that is because the inventory is so low, and they’re not interested in run-down homes. But, on the other hand, homes in good condition are still selling quickly. For now, anyway.
- A negative economy exacerbates the situation - Housing costs have surpassed wage growth and inflation by more than double over the past decade. Today's high inflation rate only furthers the problem. However, residential real estate is a hedge against inflation as long as affordability doesn’t deteriorate further.
We’re in a unique situation right now where home prices have grown in double digits the past two years, so most people have sufficient equity. Inventory of homes for sale is rising but still at very low levels, so houses for sale in good condition are in high demand. It’s still a “perfect storm” for home sellers. How long will it stay that way? Probably not much longer. All signs point to now if you’re even thinking about moving and cashing out your equity.
Some More Facts
- Existing and pending home sales have dropped - NAR
- Monthly payments have increased by more than 50-percent in just four months because of higher mortgage rates - George Ratiu, a senior economist with Realtor.com.
- 80% of respondents said now is not a good time to buy - Fannie Mae
- A record high of 81% who think the economy is going in the wrong direction - Fannie Mae
- Housing is now the least affordable it has been since the mid-1980s - Black Knight
- The Federal Open Market Committee’s median committee member expects another 175 basis points of hikes before year-end - NAFCU
Big Takeaway
If you have been thinking about selling to cash out your equity, it is time to get off the fence now before rates increase further, and equity starts to erode.
Contact me today to set up a no obligation, free consultation so we can talk through your goals and discuss what these changes in the market mean to your specific situation.
Email: ken@livinginsouthreno.com
Cell: (775) 525-0309
