Three positives in the market-Buffini and Company published on HomeSmart Real Smart Agent
1. Inventory and sales varies depending on specific market
In many markets, home sales are down but in others, they are steady or even slightly up year-over-year. There are several things factoring into this. Certainly, rising mortgage rates have caused some potential buyers to drop out of the market. And those who previously locked into historically low mortgage rates are hesitant to sell their homes and take on a much higher mortgage rate.
However, in many parts of the country, home sales are actually up. Not only that, but they are also selling at full price or more after going through a bidding war.
But one critical reason home sales are down in many parts of the country is that there simply are not enough homes for sale. The actual inventory of homes has increased by over 67% year-over-year—but the number of homes needed is still significantly down.
For many, the quest to buy a home is still a frustrating experience, especially for those who are considered middle-income buyers (households earning up to $75,000), according to the National Association of REALTORS®.
Limited inventory also affects those who make over $150,000 a year, according to the Wall Street Journal. As a result, these would-be buyers—an estimated 3 million—are renting instead of owning a home. It stands to reason that if there were more homes available for sale, many of those high earners would purchase a home.
2. A return to more realistic mortgage rates
There is no doubt that mortgage rates are higher than they were a year ago. But again, perspective is everything. When reviewing data from Freddie Mac (the government-entity that tracks mortgage rates) it is noted that rates throughout much of the 1980s were extremely high. Rates ranged from 9% to 14%, with the highest rate ever recorded, 18.4%, in 1981. Many experts believe current rates will start trending down slowly by the end of 2023, to approximately 5.5% by the end of 2023.
3. Astounding amounts of equity
For sellers, the challenge will be to alleviate any FOMO (fear of missing out) that many of their potential sellers may have about not selling sooner. But a silver lining for these clients is the equity they have earned in their homes. Indeed, over 68% of Americans have paid off their mortgages or have at least 50% equity in their homes. Homeownership continues to be a wise investment, even in a fluctuating market.