It’s the season for friendly gatherings! And you know what that means? Everyone is going to be talking to you about the real estate market!
The fact of the matter, there’s lots of speculation about what‘s happening in housing right now, and everyone has an opinion on it.
So, sit back, sip some hot cocoa, get the answers to the top questions you’re going to need to answer this holiday season.
WHAT WILL HAPPEN WITH HOME PRICES?
As the housing market continues to struggle, this question is likely to come up again and again.
While we can’t predict the future, you can help others understand how the current trends might affect them by providing a well-rounded perspective based on data, insights and expert opinions.
The most important thing to remember is that this is a rapidly evolving market that is changing constantly. When we see shifts in the housing market like these, it can often feel impossible to keep up with everything that is happening, but here is what we know about the current situation.
Yes, homes are remaining on the market longer. Most of us aren’t seeing a large influx of newly listed properties, suggesting we’ve returned back to the seasonal norm we typically see this time year.
However, it is still a sellers’ market.
This quote from DJ & Lindsey Real Estate CEO, DJ DellaSala sums it up best:
“Customers waiting for a large decline in home prices will find themselves very upset. Buyer demand is shrinking but that doesn’t mean prices will drop. These homes still hold a ton value to the right buyer.”
DJ DellaSala, CEO of DJ&Lindsey Real Estate
Why? Because the price of homes are being driven by supply and demand. And we still have a low amount of inventory on the market. This is why we continue to see an increase in home prices.
With that in mind, bringing these national insights along with what’s happening locally can really help you, your family, and your clients understand what’s ahead in real estate.
This means that bringing in both national and local data will help you, your family members, and your clients better understand the bigger picture of where things stand today.
That said, what we’re seeing right now is some of the overheated markets where prices rose so quickly during the pandemic are beginning to see more of a change in prices than some of those other markets that may be steadier.
WHAT’S GOING TO HAPPEN WITH MORTGAGE RATES?
More than anything else this year’s real estate market has been defined by sharply rising mortgage rates. And these rates haven’t just gone up. They have more than double in less than a year.
In fact, the average monthly mortgage rate is about $1,000 higher than it was a year earlier. But the biggest question you need to be able to answer right now is why?
And the answer to that is simple – inflation. The Federal Reserve has been making moves to cool off the economy and the real estate sector plays a huge role in our overall economy.
So, as inflation remains high, mortgage rates will remain high. And as history shows, when inflation begins to ease, mortgage rates will follow suit.
As people wonder about what will happen going ahead, the answer is to simply watch what happens with inflation.
Then there’s another piece of this puzzle, the dreaded “R” word: Recession.
The biggest question here is whether a recession is called, and how it will affect the housing market. Most buyers and sellers believe that a recession means a total collapse of the housing market like what happened in 2008, and in most cases, the truth couldn‘t be further from that reality.
For example, a recession doesn’t necessarily mean falling home prices.
Only two out of the six previous recessions had seen a drop in home prices. However, bringing it back to mortgage interest rates, a recession usually means mortgage rates will rise. Download our free holiday slide deck so you can see how mortgage rates fell in each of the last five recessions.
SHOULD I BUY A HOME RIGHT NOW?
It’s not shocking to find ourselves asking this question give the 2 questions we just answered.
To be able to answer it effectively, we have to remember our number one job as a real estate agent. We’re not here to convince people that they should buy or sell a home. We’re here to present all the facts, insights, and data so they can make confident and informed decisions.
At the end of the day, if you’re the most educated you can be and translate your knowledge to your customer, you’ll know you’ve done your job correctly. More often than not, when your customers have all the facts its easy for them to trust you and make the right decision. And thats use you to buy or sell a home!
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt. These decisions can be hugely consequential for consumers and businesses,” said Jason Lewis, co-founder & chief data officer of Parcl.
So, is it a good time to buy a home right now? The answer may be different for every client you work with.
For first-time homebuyers, the biggest factor to consider is rising rent costs around the country. Homeownership presents the opportunity for a stable monthly payment as well as the ability to build wealth and make a financial investment. It offers security and a sense of accomplishment that renting can’t.
The next piece of this is that life happens. Personal situations change, jobs require relocation, aging parents may need to move in, etc. These can all play a big part in someone’s need to buy or sell a home right now or in the near future.
The best way you can answer this question is to:
1) Figure out their motivation to buy or sell a home right now so you can understand their needs.
2) Put on your knowledge broker hat, take all of the national and local market data you have and present it to them so they can decide on what’s best for their next move.
At the end of the day, while the market may be changing, there are many financial and non-financial benefits of homeownership that stand the test of time. It’s one of the biggest ways to build wealth in this country.
“If you can find a house that meets your financial expectations for a monthly payment and it is a good time for you to buy, then do that…And if you wait for prices to fall and they never do, you may discover the hard way that the house you found a year ago that you really loved, that you could afford but you passed on, is more expensive next year,” Odessa Kushi, deputy chief economist of First American.
So, painting the full picture and backing that up with visuals so you’re not just telling, but showing them what you’re talking about is the best way to answer this question.