George Ratiu has been studying the real estate market for over 15 years. He is a Senior Economist and Economic Research Manager at Realtor.com, focusing on trends in the global economy and real estate markets. He is also a former research program manager for the National Association of Realtors, specializing in housing statistics, international and commercial real estate market performance, and more. (Realtor.com is part of the same parent company as MarketWatch.)
So we asked Ratiu: What do buyers need to know about the property market right now? (Check out the lowest mortgage rates you may be eligible for here.)
1. Mortgage rates may continue to rise
“Surge in interest rates pushed monthly mortgage payments for median-priced homes by $550 higher than a year ago, a significant increase considering that most households are also feeling the pinch from higher food, gasoline, auto and clothing prices. Equally important, interest rates are expected to continue to rise as the Fed tightens the flow of credit,” said Ratiu, who predicted that if the pace of growth continues, we will soon see rates on 30-year loans hit 6%.
2. Not enough homes for sale – this makes your options even more limited
One thing to keep in mind is that the number of homes for sale is still lower than last year when there is intense competition for buyers, so inventory is still limited. “The main reason for this shortage is that builders haven’t matched the pace of construction to population and household growth over the past decade,” Ratiu said. In fact, according to research by Realtor.com, there is a shortage of nearly 6 million homes, This makes it difficult for all buyers looking for property to find enough homes.
3. Home prices may continue to rise in many markets, but not as fast
Ratiu predicts prices will also continue to rise as there are still more buyers than homes for sale. “In many markets across the country, buyers are finding that their bids may still be higher than their cash bids or those with a higher down payment,” Ratiu said.
But because of the sharp rise in interest rates and inflation, he said we are approaching the top of the price growth curve. “In some markets, sellers are finding that buyers are starting to spend more time searching and are less willing to let go of the unexpected, insisting on home inspections and asking homeowners to fix flaws in the property,” Ratiu said. What’s more, he said, prices have fallen in more than a dozen cities across the country over the past few months, suggesting the market is starting to return to a more balanced direction.
“We can expect prices to continue to rise in the coming months. The bottom line for consumers is that higher spending will be in their pockets at the end of each month as rents and house prices continue to rise at double-digit rates. less money,” Ratiu said.
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4. Sellers still have an advantagebut not so extreme
In most markets across the country, sellers are likely to maintain an edge. However, given the combination of high prices and high interest rates, their advantage is starting to wane – which has driven millions of buyers out of the market. Ratiu said the slowdown in demand was evident, as sales of both new and existing homes had fallen over the past few months. “20% of homeowners said they plan to move forward with plans delayed by the pandemic and put their property on the market this year. The increase in supply will lead to more competition among sellers and a market to turn more towards buyers, “Ratiu said.
5. Don’t let FOMO fall you’re in a house you don’t love
The main takeaway for buyers this year is that the housing market has clearly transitioned from the frenzied pace of 2021. As financial and economic stress builds, Ratiu says it’s important not to let the fear of missing out lead you to rush into buying the biggest property. buy most people’s lives. “The pace of new construction is picking up, more homeowners will be ready to list, and prices are already adjusting to slowing demand as interest rates rise. Patience, often seen as a virtue, may also be a key factor in home-hunting this year,” Ratiu said.