We all have witnessed a marked change in the last 9 months, being a seller's market since 2012 and getting hotter and hotter every year; first by homes selling within 60 days of being in the market, then within 2 weeks, to later move all the way up to selling even in the first day, with crazy bidding wars and offers as high as $100K above list price!! More than 10 years of this madness seemed to be gone from night to day, everything changed and buyers started to frick out.
Many people thought the pandemic was going to drop the real estate market and decided to not buy and wait for the outcome however, that was a huge mistake since the pandemic was a boom that continued strong all the way to the beginning of 2022 and contrary to what everybody thought, demand was incredibly high and supply was incredibly low. Even in 2022 average Sold Price increased by +18.5% from January to May.
WHAT HAPPENED?
What really happened was that the Fed decided to fight the hot market and raise mortgage rates by more than double to stop the inflation, this caused the market to give back all of the early gains and prices dropped -18% by December 2022. It’s important to remember that the market downturn was caused almost entirely by the increase in interest rates and the drop in buying power.
NOW WHAT?
Although this can sound scary it is not, because now we are finally seeing a more stabilized real estate market, in were buyers have a better chance to jump into the homeowner's group because now we have more inventory, prices have dropped to a fair price and interest rates are still historically low.
I understand that we are all spoiled with the 3% rate we had for so long, but we have to remember that only before 2011 we had interest rates in the two digits, now mortgage rates have stabilized in the 6% range for 3 months. Therefore this is the right time to buy and take action; start by talking to your real estate agent and get ready.
WHAT ABOUT SELLERS?
On the other hand, sellers are NOT losing, they might not get the crazy offers we were seeing during the pandemic, but, they will still be able to see a good ROI.
Now that spring is approaching it is a good time to pick up all those Real Estate projects and take action.
