Increased interest rates have slowed our market, but it is still strong.
The market seems to be reaching a tipping point. While home prices are still climbing nationally, the increased mortgage costs have also pushed some buyers out of the market. National home sales actually fell 2.7% in March, and mortgage applications dropped 5% in mid-April.
The main reason for this is the sharp rise in interest rates. They have hit an average of 5.35% nationally, which is a 2% increase from just a year ago. Interest rates may not affect you directly as a home seller, but as the chief economist at the National Association of Realtors says, “Many buyers will be forced out of the market because of the hit to affordability from rising interest rates.” That could put a damper on the number of multiple-offer situations and lead to increased days on market.
Now, it’s not all doom and gloom. Increased interest rates are causing a dip in buyer demand, but home inventory is still scarce. Another chief economist, Daryl Fairweather, said that while this increase is slowing demand, “It also appears to be discouraging some homeowners from selling. With demand and supply both slipping, the market isn’t likely to flip from a seller’s market to a buyer’s market anytime soon.”
You may be wondering how inflation and our general economic situation play into this. While inflation is hitting the average consumer hard and some worry we may see a recession in 2023, the real estate market is expected to remain strong. Interest rates are slowing down buyer activity, but it likely won’t be enough to cause a crash.
Overall, it is still a fantastic market to sell your home. Prices have never been better, and while higher interest rates may make it a little harder to buy, there are plenty of strategies that can help you find a new home and make the whole process smooth. That’s what we’re here for!
The market projections are positive, but the future is still uncertain, so this may be sellers’ last chance to get these magical numbers before rates climb too high.
We are here to keep you in the loop and up to date on all things Austin real estate. If you’re curious about what your home could sell for in today’s market, just click this link, and we can email you a home value report as a courtesy. Of course, feel free to call or email us if you have any questions.