The current state of the Real Estate Market
Here’s where we are in today’s housing market, and the effects the recent change in market conditions has had on home buyers and sellers alike. The Real Estate housing market correction won’t be as deep or pronounced as you would expect given the continued shortage of housing in the US.
In a recent article by Bloomberg with the headline “Home Sellers Are Pulling Properties off the Market at Record Pace” dated December 2nd (read the full article here), the article suggests an average of 2% of homes for sale were delisted without being sold each week for the last three months compared to 1.6% a year earlier. The headline is a bit misleading since the difference in delisted homes this year vs last year is insignificant on a nationwide scale, especially since we are currently still experiencing a housing shortage and property investors and REITS continue to pick up the slack in this market, capitalizing on declining home valuations thereby increasing their returns.
Know Your Market
The article also suggests that sellers who may have taken out a mortgage loan at a low rate are less likely to sell their homes in these market conditions. However, let’s not forget the bidding wars that took place during the “pandemic era housing boom” that created this so-called housing bubble, to begin with. While pandemic-era homebuyers threw caution to the wind, ditched the home inspections, paid a premium in fear of missing out on the housing boom, those premiums cost them equity in the long run, and I don’t foresee homeowners being too happy losing the equity in exchange for keeping those low mortgage rates they borrowed against.
Homeowners and home sellers alike have had an eye-opening experience and are slowly awakening to the fact that they can still salvage the equity in their home and trade up or buy a similarly comparative property at a lower valuation with a higher mortgage rate, ultimately the tradeoff yields the same outcome, with exception to a little extra cash in their pocket from the realized equity gains on the sale of their once overvalued home.
Gone may be the days of bidding wars and overvalued Real Estate, but buyers and sellers are still reaping the rewards of more affordable home prices albeit at higher mortgage rates, and the opportunity to cash in on some unrealized equity gains.
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