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How to Buy Your Home In Todays Real Estate Market

The current real estate market is changing. As with most things that have altered since the pandemic, the current real estate market has entered a “new normal.” As a result, there are many insights about where the market is going in the next few months. But no matter how many projections analysts make, it’s one of those “wait-and-see” situations. So far, the recent changes that the Fed has made to the interest rates have slowed the runaway seller’s market in some places that have dominated for the past few years. So there seems to be a cool-down occurring. But before you decide to sell and buy your house at the same time, it may be a good idea to keep an eye on real estate developments over the next few months. Keep reading to learn more about where the market has been, where it is, and where it is projected to be for the rest of the summer. 

Real Estate in a Post-Pandemic Market 

While the pandemic disrupted many’s lives worldwide, some good emerged from such a tumultuous time. Lockdowns may have caused the real estate market to get off to a rocky start. But shortly after the pandemic lockdowns, the real estate market started booming at unprecedented levels that hadn’t been seen in decades. Sellers were selling homes far above asking. Low inventory coupled with low-interest rates fueled the flame of home sales that only the Fed could stop with recent interest rate hikes. While sellers benefited from the market, buyers have had and continue to have trouble in this strong seller’s market.

Seller’s Firm Control Over the Market 

Even after the interest rate hikes, sellers still have control of the current market. According to a recent study by Homelight, sellers still have 95 percent control of the real estate market, down from 98 percent in the first quarter of 2022. The fact that there has been some decline shows that the Fed’s measures to control inflation and an imbalanced real estate market are starting to show progress. But only time will tell. Mortgage rates have climbed to over 5.25 percent, the highest level since 2009. So this change is starting to limit buying power for many low-income and middle-income buyers, whether they are first-time buyers or seasoned ones. Cash buyers and high-income buyers are still able to purchase, however. 

The one factor that hasn’t changed is how much inventory is available to purchase. Many hot markets are still short on housing, which will keep the prices steep. Until builders start to build more homes or more people relinquish their fear of the current economic trends and sell their homes, affordable housing will still be an issue. As the threat of recession continues to loom and the cost of living continues to rise, this will keep some buyers out of the market. Although the Fed is doing as much as it can to gain control, it may take months or even years before the real estate market can get back on an even keel. Ultimately, sellers presently still call the shots. 

How Will Buyers Approach the Market Now? 

As the market continues to experience twists and turns, you may wonder whether you should try to buy a home in this market. Many potential buyers are waiting to see if the market can make a turnaround first. While the Fed has pumped the brakes on this topsy turvy seller’s market, inventory is still at an all-time low. So what exactly can you expect as a buyer in this current market?

First-time Homebuyers Dilemma

Unfortunately, this market has already been a slippery slope for first-time home buyers. While the recent interest rate hikes have slowed the seller’s market a bit, it is also minimizing the buying power of homebuyers. In a few short months, the interest rate has gone from about 3.3 percent at the beginning of 2022 to a whopping 5.25 percent. And the Fed may still increase it over the next few months to control inflation and the unstable real estate market. While this is good for the overall economy, this could mean bad news for first-time buyers. Before the interest rate hikes, first-time homebuyers were priced out of the market by competing homebuyers. Now, the plans to fix the economy may also keep them priced out of the market. Potential buyers who barely qualified for financing before are flat out being denied. So, as a first-time home buyer, you may not see the benefit of these changes for some time to come.

Seasoned Home Buyers

Seasoned homebuyers may face some of the problems that first-time homebuyers face in this market. However, unlike first-time home buyers, they may have more leverage because they already have a home. Selling their home can give them the money they need to purchase a house. This is especially good if they can sell for well over market price. This extra cash is beneficial in helping with down payments and other costs associated with buying a new home. Unfortunately, there is still the dilemma of inventory shortages. Some sellers may sell their homes and find that they can’t purchase a new one because the supply isn’t available. This is causing many homeowners to have to rent until they can close on a new home. If you are a seasoned home buyer, you may have more success than first-time home buyers, but there still may be problems finding a new home. 

Renters Are Being Forced Into Home Buying

This market is creating a new normal for renters, too. Many die-hard renters who have never bought a house and may have never intended to buy one are considering purchasing a new home. The rental crises that have emerged nationwide have driven up rents since 2021. Some have seen rental payment hikes as high as 11 percent, while others in many regions across the southern half of the United States have seen rent increases as high as 40 percent. The steep increase in rent without an increase in income is causing many renters to decide that homes are the more affordable option. If you are a renter, you may do better by purchasing a house. However, keep in mind that you may experience the same dilemmas as first-time home buyers. 

So, what is the fate of the real estate market? It’s hard to say if the interest rate hikes will do any good since so many other moving parts of the economy are in disarray. High gas prices, the cost of food, and other problems keep inflation at an all-time high. But some markets are experiencing a cooling-off period that may last until the end of this quarter. So, as you proceed with buying a home, it is ideal for moving forward strategically. Perhaps this cooling-off period will start to bring much-needed inventory and restore balance to the real estate market. 

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