1. Rising interest rates will badly affect the value of real estate
Moreover, the housing market crash in 2008 has caused home prices to rise faster in the decade preceding it in the United States. Including the years leading up to the crash. This price surge was due to a number of factors, including a lack of inventory, particularly in certain price ranges, and the rising demand for homes as homeowners searched for a better financial situation.
As we all hope for the housing market to be stable, several external factors affect the overall market in the U.S. and it is important to consider them all when making a judgement.
2. Mortgage rates are at an all time high!
In contrast, if you are considering selling your property now might be the time. Keep in mind, for every 1% increase in mortgage rates, 18% of the potential buyer pool will be priced out of the market. Thus if you continue to wait and interest rates continue to rise, then a large portion of potential buyers will no longer be able to afford your home. This can make it more difficult to sell your home in a desired time frame.
3. The housing market is currently in a bubble ready to pop
Keep in mind today’s real estate market is very different from what we have experienced in the past. In the past, real estate prices were largely driven by speculation, as people often bought property without really thinking about the long-term costs and benefits of owning a home. Also in the past lowered lending standards made it easy for just about anyone to qualify for a home loan or refinance their current home. This led to a volatility in the market as lending institutions took on much greater risks in both the person and the mortgage product offered. That led to mass defaults, foreclosures, and falling prices.
4. Here are some buyer and seller myths of today’s housing market
5. Listen to Our Experts Discuss Rates
Several misconceptions have surfaced as a result of rising inflation and interest rates in the overall U.S market. Keep in mind that for every 1% rise in interest rates, you as a buyer lose 10% of your purchase power. Thus making it virtually impossible to “out save the market”, if prices and rates both continue to climb upwards. This may be understandable as investors would want to protect their money from market uncertainties. However, it should also be known that over the past crises, the real estate market has proven itself to fare and rise stronger amidst the challenges. It has proven to become one of the best assets to grow your equity or net worth in the long term.
Moreover, the current housing market is far from being in a bubble. Data shows that the concern of major foreclosures is unrealistic, thanks to considerably tougher lending rules and historically high levels of homeowner equity.
Professional intervention is always encouraged for a buyer or seller as every situation is unique and requires a different approach. Feel free to schedule a consultation with us and we will be happy to guide you every step of the way.