Ahhh… a ‘normal’ spring/early summer! After a few years off her meds, it looks like Mother Nature is getting back to ‘normal’. Yes, there is a lot of rain, but that is ok. Rain is good for the 4th of July! We have been so dry the past few years…we really need this.
Talking about ‘normal’…..yeah, I can’t quite apply that to the real estate market…..yet. Well, maybe a little. Unless you have been molding under a rock in a backwoods somewhere, or have no access to TV, or the internet (you lucky duck), you by now know that interest rates have been steadily climbing the past 6 months. In fact… I already did a post on this. I do get questions on how this affects buyers & sellers, so let’s talk about it…
One thing the rising interest rates have done, is put the white hot housing market in an ice bath, and everything has shriveled and pulled back faster than a teen caught skinny dipping. We look to be getting over the multiple, multiple offers of the past 2 years, and (gratefully) getting over the buyers offering over what an appraisal might come in at with those 22AD addendums. If you are not sure what the 22AD, Low Appraisal Addendum, was…please refer back to one of my previous posts in which I really dug into it. You can always call and ask me too.
We are seeing some homes last longer on the market, and housing inventory has gone up. When I say that the housing inventory has gone up, I mean that we have about a months worth of inventory … which is better than 2 weeks worth where we were at not too long ago. Buyers have a chance now to buy a home without promising their first born child, their kidney, and a lifetime supply of tacos to the sellers.
Let’s be honest, the last few years have been brutal to buyers. Even buyers with money for large down payments, and their own closing costs were struggling. The rising interest rates are balancing the scales with buyers and sellers. This is good. The bad? Well, you know there is never good with out some bad…
Rising interest rates means that, as a buyer, you are preapproved for less money to buy a home with….for the same payment. For example… someone who purchased a home last summer for $700,000 has the same payment as someone who purchases a home for $550,000 right now. That is the bad. Of course, the buyer who purchased their $700,000 home last summer probably offered way more than the home was listed for.
The good is that a buyer has more homes to look at, has less buyers to compete with on offers, won’t need to promise $$$ over a low appraisal or list price, & won’t need to waive their inspections (which, as a buyer you should never do), and in fact, a buyer in today’s market can request reasonable repairs for health & safety and have the seller be willing to negotiate them. Not to get crazy, or anything, but my last 2 buyers even were able to finance some of their closing costs into their loan (aka seller paid closing costs…subject of our next blog). This is just huge and something that I haven’t been able to do in the last few years!! I felt like dancing the samba… that is, if I could hold a beat and dance. If you are a buyer, now is a great time to be one. Rents are seriously higher than Johnny Depp on a bender, and unlike dear Johnny, they are probably not going to come down anytime soon due to inflation. Yeah… I said it.. Inflation. I know it is a dirty word…it’s like saying the ‘F’ word in a daycare, or the “L” word on accident to your crush on your first date.
The market … it is a-changing…
Whether you are thinking about buying, or selling, you have seen a lot of BOM (Back on the Market) homes. There are legal reasons for a buyer to back out like home inspection, appraisal, financing, HOA review period, and a few more. Buyers are using these contingencies to back out of the contract. I’ve seen a few buyers back out of contracts recently because the buyers didn’t get their rates locked, and they jumped. I’ve seen a few buyers recently back out because they felt they could get a ‘better deal’ elsewhere. As a sellers agent & as a buyers agent, as soon as the contract is signed around, I am sending that signed around contract immediately over to the lender. As a buyer (& buyers agent) you want to make sure you get that interest rate locked in. Buyers should not be backing out because they feel they could get a ‘better deal’ elsewhere….because with interest rates… they are not.
We are also seeing a LOT of ‘price corrections’, and price reductions. These are sellers who listed too high for our current market. I’ve been telling sellers for awhile that we need to list for what comparable homes are listing for…not selling for. With the market changing, and so quickly, this is the time to get AHEAD of that change.. not behind it with price ‘corrections’ (aka REDUCTIONS). As a seller, we need to be realistic about the market as it currently IS….not as it was 4 months ago, or a year ago.
Heads up my friends… We are in a different market. When you are thinking about buying, or selling… in this market, you need to be asking the right questions. Ask the realtor you are talking with those all important questions to make sure they are equipped to help you with this changing market. Those of us who have been licensed awhile have seen this before. It is time to go back to basics…. so make sure your Realtor has those basic skills to fall back on.
Is it a good time to sell?
Yes, it is still a good time to sell. I know many people were holding off because they were not sure they could find a home to buy, well, now there are homes to buy, and sellers are looking at contingent offers again! For folks who want to sell, & are looking to buy their next home, this is a big thing. When selling your home talk to your Realtor about their marketing plan. These last few years, marketing plans were like parsley … pretty to look at on the plate, but pretty pointless. Now though? In our changing market, a Realtor’s marketing plan is going to be the juicy steak (or juicy tofu if you are into that).
Is it a good time to buy?
Yes, it is still a good time to buy. Owning your own home means you are not at the mercy of rising rent costs, and landlords looking to sell investment properties. If interest rates drop.. you can always refinance later for the lower rate. Remember that real estate is not supposed to be a sprint where you sell & move every few years…. real estate is like nice jog (for those of you who like that sort of thing) or a nice meal with friends that you linger over.
There is a pro & con to every market. Nothing is ever all good, or all bad. In the meantime, I will continue to stare at my crystal ball & shake the magic 8-ball relentlessly…
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