The summertime real estate market is a lot like a theme park – ups and downs like a roller coaster with sales, activity and interest rates and a lot of unknowns like a haunted house.
There are a lot of questions around what is happening in the market from sellers and builders we are working with to sell their houses.
It is an interesting dynamic where we have extremely low interest rates – at or near 4% – and a high home affordability index yet sales are not as strong as we expect them to be considering this situation.
One potential reason is price appreciation along with the multiple offers earlier this year. Many potential homebuyers naturally paused to wonder: is it a new bubble? Or can I afford these prices? But price appreciation has greatly moderated as we have seen inventory rise dramatically since the beginning of the year.
Therefore, potential homebuyers will no longer face the sticker shock and can now make rational decisions about whether or not it makes sense to buy a home.
Along with the increase in houses on the market, we will be creating new buyers as these homes sell. So demand will increase as more sales happen in many instances.
Another reason is the economy isn’t growing as quickly as was expected and consumer confidence is not extremely strong. Once buyers gain confidence in the economy, housing will follow suit and grow with the economy. Until then, we will see moderate house sales as well as price appreciation.
We also are still experiencing tight lending guidelines and underwriting policies on mortgages. It is still hard for many potential buyers to obtain loans. The “qualification pendulum” is still too far to one side and needs to be moderated to allow more buyers into the marketplace with sound lending practices.
So, in order to be a seller in today’s market, you need to be patient. Good houses, properly priced, in the right condition will sell. It will just take a little longer.
If you have any questions or concerns, please call me (703) 652-5777 so we can discuss your personal situation in more detail. We are here to help.
Happy 4th of July!