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where is the market moving?

With high interest rates, low inventory, and competition in the market not letting up, what should buyers and sellers really be doing now? Here's our analysis for approaching the market with what's best for you.

the unpredictability of interest rates

Even though we see extensive forecasting and analysis on interest rates from experts, nobody truly knows what lies ahead. Time and again, predictions have been made, and the outcomes have not matched expectations. Recently, economic strategists have mentioned the possibility of an intentional pushing of rates to generate a controlled recession. This strategy aims to prevent inflation from spiraling out of control. While this would mean rate could remain higher for the time being, it's still just a prediction.

the inventory paradox

With rising rates, we'd normally see a slowdown of the buyer frenzy; but these rising rates have had a big impact on the already tight inventory. Many homeowners had refinanced their properties when rates were at historically low levels, such as 3%. This has created a major lack of motivation to sell unless absolutely necessary. The result is an even bigger drop in the normal supply of available properties, leading to a stronghold on prices and a continued competitive playing field for the remaining buyers.

Even if interest rates were to drop to, say, 5%, the cause of inventory issue would persist. And the increased affordability of a slight rate drop for buyers could fuel more demand, potentially leading to an even more competitive market.

so, what to do?

It's crucial to remember that real estate investments are not short-term endeavors; they require patience and prudence. While interest rates and prices might fluctuate, the value of a property can appreciate over a longer time.

For home shoppers caught in a dilemma, remember — if you move in a high price market, you sell high, but you also buy high; if you move in a low price market, you're buying low, but selling your current home lower too. So at the end of the day, your personal margin on the move might end up similar regardless of the market you're working with. For first time buyers afraid to lock in rates, don't forget — if interest rates drop after you buy, you can always refinance to secure a lower rate. You may even be at the advantage and skip a bigger market frenzy while still later benefiting from the lower rates.

making informed market decisions

The interplay between interest rates, inventory, and buyer-seller behavior adds layers of complexity to an already intricate market. As potential buyers and sellers, it is essential to work with a professional who can help you navigate the current situation while keeping your personal goals on track.

Whether you are currently in the market or considering a future investment, remember that navigating the real estate rollercoaster requires a steady hand and an understanding of the broader economic context. Always talk to a real estate professional to make the most informed decision.


Contact us for a free market analysis.

Posted by arhome realty on
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