Post by Daniel Maurer
This has been a spring of change for the real estate market.From rising rates to flattening home values, the market is in flux. Here are afew insights on the current market as we are heading into summer.
EXTREMELY LOW INVENTORY
One of the most notable summer real estate stories is the lack of inventory in the market. There are still many buyers out there despite the higher interest rates but there simply aren't enough properties available to meet the demand. This has led to bidding wars and many frustrated buyers. Most homeowners either bought a new home or refinanced an existing home over the last two years and simply aren't willing to give up their lower interest rate. Buying power has been badly affected, so sellers are typically only moving if they “have to.” Rates will inevitably go lower again at some point soon, but likely not sub-3%. When rates can work themselves down around 5% again that should loosen the seller market up.
INCREASED REAL ESTATE INVESTMENT
Another spring trend that is going to continue into summer is increase in real estate investment, especially in lower priced markets. Amid economic uncertainty and market volatility, some investors are turning to real estate as a safe and profitable investment option. Converting these properties into high-yield rentals is possibly a safer investment than the stock market, and may stay that way for the next few years. While real estate investment does come with its own set of risks, many investors view it as a more reliable option in the current economic climate.
PRICE INCREASES HAVE SLOWED
In terms of housing prices, in our local Chicagoland area, prices have leveled compared to the previous two years. In fact, according to Illinois REALTORS® the average housing price dropped 1.5% from this time last year. The growth rate of the last two years was completely unsustainable, so a slowdown of price increases is a welcome sight for many. Banks have also tightened up their appraisals, which has also helped to slowdown pricing increases.
If you'd like to discuss these topics in more depth, or have other questions about the market, please reach out!
If you are looking for some advice on a real estate transaction, my door is always open