The Honest Broker: Are Market Winds Changing Direction?
BY: DIANE LOTT, BROKER PARADISE FOUND REALTY, INC
Over the past year or so, the market favored and benefited the seller as housing prices began to soar. Buyers were paying over the list price just to “land” a property. Competition between buyers, migration of buyers coming into the State of Florida, and little inventory fanned the flames. Sellers were reaping the rewards and buyers were finding themselves up against the wall, paying higher than usual prices for homes.
Even renters were having difficulty finding an affordable, livable place to lease. Rental prices were elevating at the same pace as the housing market. However, I have noted a definite change in the market due to several factors which include inflation, buyer hesitation, the rise of interest rates, and more inventory coming into the market.
Over the summer, inflation hit 8.5% and money tightened for most Americans. Buyers are hesitating on whether this is a good time to buy or if they should wait, as they see evidence that home prices are coming down and worries that there is a real estate “bubble”. The are also standing still because their ability to qualify for a loan is in question. As the interest rates increase, what they can qualify for diminishes. The result is that the $350,000 property that they once qualified for is now down to $325,000 to make allowances for higher interest rates.
Also, as an increase in properties enter the market creating more inventory, the rule of “supply and demand” enters the picture. More homes becoming available to buyers are placing sellers into a situation where they are now competing with other sellers for the same pool of buyers. The market is seeing an increase in price adjustments in a downward trend.
As home prices begin to drop, the buyers now have a better chance to acquire a property and the scales are beginning to tip in favor of the buyer instead of the seller. However, there is still a slow down in the market on both sides of the fence because of inflation and a rise in interest rates. Over the next few months, the trend will demonstrate who will be benefiting more from the current economy, buyers, or sellers.
Be Well!
Diane
