Updated Sept. 19, 2022
How to make good real estate decisions in a chaotic housing market
You are not alone if you are on the fence about buying or selling a home now. The last year’s housing turbulence has made it hard to predict the real estate market, which creates uncertainty, the bain of decision making. From the too-hot-to-touch trends early in the year to the chill caused by mortgage rates, inflation, and general economic malaise, 2022 has had it all. Most experts agree that exuberance is over, and outrageous bidding wars are in the past. However, the housing market is still strong. So is now a good time to buy or sell?
Home Prices Still Rising
The dramatic home price increases have indeed slowed compared to early 2022. Some experts say a slower real estate market is better for buyers and sellers.
“Our clients—home buyers and sellers—can benefit from home prices leveling out,” said Jeff Taylor, Jeff Taylor Real Estate Group leader. “Residential real estate prices are still increasing, but not the crazy price increases we saw in 2021.”
The bottom line is that the homebuying demand is still high, and the price dips are bringing home prices to a more realistic level. Zillow raised home price growth forecasts for 2022 as demand is strong, and the consensus among economists is that we are not in a housing bubble that is about to burst.
Money and Mortgages
What’s up with the economy, and how will it impact mortgage rates? Rates are higher now than six months ago, but it’s estimated they will rise again. The Federal Reserve signaled it might raise the benchmark rate by 50 or 75 basis points at their meeting later this month. Beyond that, rates may increase to 125 basis points by year-end.
Also, all the economic signals point to entering a recession (if we are not already there) by 2024 as the Federal Reserve works to tame inflation, according to Jason Obradovich, CIO with New American Funding.
So Why Buy Now?
Don’t let the housing turmoil get you stuck in the mud. Instead, look at this from a long-term perspective.
It may be a long wait for mortgage interest rates to fall. Rates jumped back past the 6 percent mark in September, but experts are signaling rates have not yet reached the peak, and increases are in the cards.
While financing is essential, it’s not the only decision point for purchasing. There’s a lot of context to consider as well.
Buyers: Make Lemonade!
At the start of 2022, buyers were paying significant amounts of cash over appraised value. Let’s face it, in some places; buyers were at the mercy of sellers. Now, broadly speaking, property values have declined, tipping the scale slightly to favor buyers rather than sellers.
If the alternative to buying is renting – whoa. Watch out. Rents are at an all-time high in Atlanta. [source] The Atlanta Journal-Constitution reported that rent in metro Atlanta was up 17% from the same month last year. The average monthly rent is now $1,488.
Long-term, the money and mortgage policy guys don’t want interest rates to remain high. If history foretells, rates will drop again. Plan to refinance then get a lower rate.
More on these last 3 points in next week’s Blog.
The bottom line is, that the real estate market is still a solid investment over the long term. So, take the “Housing is Crashing” headlines with a grain of salt and consult your realtor and mortgage broker to help you figure out what’s right for you. If you are dreaming of a new home and new neighborhood, now could be the right time to make a move.
This post was originally published on Sept. 14, 2022.
