Real Estate Information for a Shifting Market
While it’s true that real estate markets are often changing, and market dynamics can and do vary from location to location, significant changes in the economy in general have a measurable effect on real estate.
Most people are aware that mortgage interest rates have been rising over the last few months. With any big change like this, the real estate market goes through a shift.
Unfortunately, when markets are shifting, we often find conflicting information in the headlines. Sometimes it’s a bit sensational, and sometimes it’s just wrong.
Fortunately, we have a collection of wise advice from some experienced and informative real estate bloggers. Let’s dig in and learn about several aspects of a shifting real estate market in July’s roundup.
Real Estate Shifts Happen
When real estate markets start to shift people will ask is it a buyer’s or seller’s market. Sometimes the answer isn’t always clear, especially when markets are in flux.
As Bill Gassett points out in his recent article over at Realty Biz News, markets are often changing. That’s not unusual. What is unusual is to find that national real estate news is often accurate for your local market.
It’s never wise to take the national headlines as gospel for your local area. It is, however, smart to understand the market forces you face in your market before you jump in to sell or purchase a home.
Consult a local Realtor® to ascertain what is happening in your market. Are they seeing fewer bidding wars, and less bidders in general? That is a sure sign that the market is shifting from the strong sellers market we’ve seen recently. Be sure to read the rest of the ten common signs that the real estate market is shifting.
Are Sellers Being Shifted Off the Throne?
We’ve seen a strong seller’s market for several years now…but could it be that is changing? Many local markets are shifting towards a more balanced market, where the demand is on par with the supply. If the market moves further in favor of the buyer, we may also see a buyer’s market in the future.
As dynamics change constantly in any local market, there are signs that signal a shift from a sellers to a buyers market. As Conor MacEvilly points out, when a real estate market starts moving from the sellers being in control to either a more balanced market or one where buyers are in the driver’s seat, you’ll want to be aware and proceed accordingly, whether you are a buyer or a seller.
How To Handle Shifts in Mortgage Rates
As we’ve encountered higher interest rates over the last few months, we’ve seen the shift in our local markets begin.
Before we panic over rising interest rates, let’s take a look at rates historically. Freddie Mac has been tracking mortgage rates since 1971. The average rate since that time is 7.77%. Mortgage rates peaked in 1981 at 18.4%. Historically speaking, today’s near-6% rates have not even reached the average of 7.77%. History gives perspective.
Nevertheless, interest rates have risen and may rise again, if inflation persists. Home buyers can look forward to a more balanced market, and there are many tips for buyers to navigate higher mortgage rates.
There are also many mortgage programs for lower income borrowers.
Shifts in the Market Can Affect Home Values
When the real estate market shifts, buyer and seller behavior often changes. This dynamic can have an effect on home values. When the market changes from a seller’s market to a balanced market, or to a buyer’s market, the accompanying factors need to be taken into consideration when we try to price a property for sale, or when a buyer is trying to figure out an offering price.
Sometimes when a market shifts and home values are affected, a home may not appraise for the agreed-upon price. Tom Horn, appraiser in Birmingham, explains six common reasons your home may not appraise in today’s market.
What happens if the home doesn’t appraise? In simple terms, the house is actually worth what the lender is willing to lend, and that depends heavily on the appraisal. Since it is possible that a home doesn’t appraise in a shifting market, home buyers and sellers should understand the possible outcomes when this happens.
Michelle Gibson has outlined five options for a buyer if the home doesn’t appraise for the contracted price. Understanding the finance contingency is crucial. Both buyers and sellers need to understand exactly what they are agreeing to.
Terminating A Real Estate Contract
Whether it is a buyer’s market, seller’s market, or a balanced market, sometimes one party or the other wants to cancel a transaction. Again, it is important for both buyer and seller to understand the contract they have signed and all the “what-ifs” that may occur.
Whatever the reason a buyer or seller has for terminating their real estate contract they need to do so within the terms of the contract in order to avoid lawsuits. State laws vary, and contingencies vary. It is a good idea to consult a lawyer when considering canceling a contract.
Paul Sian, Cincinnati Realtor®, explains several aspects to understand when buyers or sellers want to terminate a real estate contract.
Market Shifts Mean Time-Frame Shifts
As market conditions change, real estate agents can help their buyers and sellers keep an eye on several market indicators. Knowing what is going on in your local market is essential to making the best decisions, whether you are buying or selling.
One of those key statistics to watch is the average time on the market, usually called Days on Market, or DOM. This is the number of days on the market from the list date to the date a contract is executed. This number is very informative as to the direction the market is trending.
In a strong seller’s market like we have experienced, the average time it took to sell a home was counted in days. It wasn’t unusual to see the best homes go under contract in 10 days or less in many markets.
As we move more towards a balanced market, you will see the average time on market get longer. DOM can indicate other issues that are important to the buyer and the seller as well. Learn more about it in Sharon Paxson’s informative article.
Starting All Over Again
Sometimes life leads you down a rocky road. If you have ever owned a home and ran into financial difficulty then you know exactly what I’m talking about. When you’ve been foreclosed on and lost your house, you’ll need to wait a certain amount of time before you can purchase again.
Eric Jeanette goes over in detail what your options are for getting an FHA mortgage after foreclosure. See the waiting period guidelines and some of his excellent tips.
Loving Your Home in The Golden Years
As we age, it becomes even more essential to make smart home buying decisions. There are certain kinds of homes that make sense when your older. As Kevin Vitali explains it is vital that aging in place make sense. You don’t want to be in a property where your living situation is a headache.
Kevin details all of the crucial considerations to think about before buying one of your last home.
Making it to the Finish Line
If you have managed to make it over all the hurdles of a shifting market, congratulations! Your last step before settlement will be the final walk-through. It’s the last opportunity for home buyers to take a look at their new home before ownership transfers.
It is usually an informal process where buyers walk-through with their buyer’s agent and check to make sure the home is in the agreed-upon condition. Vicki Moore has a great final walk through tutorial with a handy checklist for buyers to consider. Her advice is to be prepared and lean on your Realtor® for the process.
Previous Real Estate Roundups
- Best real estate articles for June 2022 – read last months review of the best real estate articles.
- Best real estate articles for May 2022 – see a review of the best published articles in May.
About the authors: The above article on the top real estate articles for July 2022 was written by Karen and Chris Highland, with eXp Realty in Central Maryland. Chris and Karen have been helping people buy and sell residential real estate in and around Frederick, Maryland, for more than 30 years.
“We’re passionate about educating consumers about the ins and outs of residential real estate and the local market, and equipping them with realistic expectations about the process of buying and selling a home.”