The market seems to be reaching a tipping point.
While home prices are still climbing nationally, the increased mortgage costs have also pushed some buyers out of the market. National home sales fell 2.7% in March, and mortgage applications dropped 5% in mid-April.
The main reason for this is the sharp rise in interest rates. They have hit an average of 5.35% nationally, a 2% increase from just a year ago. Interest rates may not affect you directly as a home seller, but as Lawrence Yun, chief economist at the National Association of Realtors, states, “Many buyers will be forced out of the market because of the hit to affordability from rising interest rates.” That could put a damper on the number of multiple-offer situations and lead to increased days on market.
However, it’s not all doom and gloom. While increased interest rates are causing a dip in buyer demand, home inventory is still scarce. Redfin’s chief economist, Daryl Fairweather, also notes that while this increase is slowing demand, “it also appears to be discouraging some homeowners from selling. With demand and supply both slipping, the market isn’t likely to flip from a seller’s market to a buyer’s market anytime soon.”
As a result, home prices are still expected to increase throughout 2022. Zillow predicts that annual home price appreciation will “continue to accelerate through the spring, peaking at 22% in May before gradually slowing to 17.8% by February 2023.” The increased mortgage rates will likely slow home price growth, but every major real estate firm still expects home prices to grow somewhat this year.
You may be wondering how inflation and our general economic situation play into this. While inflation is hitting the average consumer hard and some worry we may see a recession in 2023, the real estate market is expected to remain strong. Interest rates are slowing down buyer activity, but it likely won’t be enough to cause a crash.
In the lead-up to the crash of 2008, the real estate market had already experienced a significant downturn. That’s something we are not seeing today. Many are actually looking to the real estate market to lessen the impact of a possible recession in 2023.
Overall, it is still a fantastic market in which to sell your home. Prices have never been better, and while higher interest rates may make it harder to buy, there are plenty of strategies that can help you find a new home and make the whole process smoother.
The market projections are positive, but the future is still uncertain. This may be your last best chance to sell your home for top dollar before rates climb even more and price more buyers out of the market.
If you’re curious about what your home could sell for in today’s market, check out this home value calculator, which takes into account recent Western Upstate SC sales:
Enter your address here to find out what your home is currently worth
At the end of the day, it’s a good idea to talk with a realtor if you’re considering selling. Give me a call at (864) 985-1234 or email me at firstname.lastname@example.org. I can help you run the numbers and work through your specific situation. Of course, if you just want to ask some questions, I’d be more than happy to answer them.
I look forward to hearing from you,