MINT HILL, NC – When the pandemic began, many people were working from home and looking for more space in their home. The real estate market went a bit nuts and selling a house was the easiest it has been for a very long time. However, buying was a massive competition and, in some cases, buyers had to wait in line like they were trying to get on a popular theme park ride.
So many people entered the market and sellers took advantage as offers came in above asking regularly. While the party was fun, it has led to a completely different real estate market today. As the party ended, many buyers are left with regrets and potential sellers are afraid to list their home for sale now.
Factors Leading to the End of the Party
With mortgage rates doubling in just a few months, a domino effect happened, which ended the house-selling party. Sellers had to consider giving up their low rate if they sell, while buyers found it harder to afford to buy a home.
Along with the mortgage rates going up, inflation became out-of-control and stock prices started to fall. This impacted buyers and sellers, which changed how both made the decision to enter or not enter the real estate market.
Add in the slowdown in new construction homes and the low inventory and the market has started to correct ever since June 2022.
The Great Hangover Has Arrived
It’s like the real estate market went to the best New Year’s Eve party ever and had way too much to drink. Now, it’s time for one of the worst hangovers ever, and just like after a big party, it’s unavoidable. Sure, everybody thinks they have the perfect hangover cure, but often, the only cure is time.
While sales are falling, prices are not falling in all areas. In some areas of the country, they are holding steady, which is making it harder for buyers. A healthy housing market should have four to six months of inventory, and in November, the country has about 3.3 months of inventory.
With mortgage rates topping 7% in October 2022, it has become harder and harder for buyers to afford to enter the market. Rates have fallen a bit, but they are still more than double the rates from 2021. Some believe it’s the worst housing affordability in decades.
Not the Same as 2008 for Homeowners
While the crash of 2008 certainly had an impact on buyers and sellers, it also had a huge impact on homeowners. The real estate hangover of current days will likely not have the same impact on current homeowners. Those with quite a bit of home equity can simply stay put and enjoy the low mortgage rate they have.
With less than 1% of homes current in in foreclosure, it’s not even close to the 4% that we saw at the peak of the 2008 crisis. More than 90% of homes have equity, which is beneficial for current homeowners.
We are certainly in a real estate hangover, but comparing it to 2008 might not be the way to go. Experts are a bit all over the place with some doom-and-gloom predictions and others coming in with housing correction predictions that are far more manageable.
Only time will tell how bad this hangover will be and there are plenty of factors outside of the real estate market that could impact housing prices.
I would love to be part of your journey when the time is right for you. If you ever have a real estate question or need, or know someone who does, trust that you can turn to me. I will help you make the right move! Anna Granger (704) 650-5707 | firstname.lastname@example.org | www.1stchoicepropertiesinc.com