Real Estate Rundown June 2023
Photo by Blake Wheeler via Unsplash
What the current rate hike means for the summer housing market.
With the rise of interest rates again at the start of June to an average of 6.79%, up from the previous week's 6.57%,The National Association of Realtors dives into how these rising rates may affect the housing market and advises buyers and sellers to consider the potential impact on their transactions. The spike in rates was due to a ““buoyant economy” that has prompted the market to price-in the likelihood of another Federal Reserve rate hike,” says Sam Khater, Freddie Mac’s chief economist. It goes on to state that the demand for housing will begin to decrease the closer to 7% the rates crawl. Though there was a hike in the rates, it is forecasted to stabilize near the 6% rate towards the second part of 2023. There are still some incentives that are helping to bring more sellers to the market and that is limited availability. Close to one third of homes have been sold over asking price
Will inventory and strong demand help to lower home prices?
Current housing market conditions, with limited inventory and strong demand, have led to intense competition among buyers, creating bidding wars and inflated prices. As a result, many first-time buyers and lower-income households struggle to enter the market, exacerbating the issue of housing affordability. While this seems to have been a problem, there is a possibility that home prices will even out and allow for these groups of people priced out to return to the market. Although this reduction to price may take some time it is already being seen, because of strict mortgage policies, there should not be a hard bottom out resulting in a new financial crisis.
What factors to look for when assessing the market and economy.
In recent years rapid appreciation of home prices, low mortgage rates, and high demand have been key drivers of the robust market. However, some see these as concerns and speculations regarding a potential market correction or crash. It is important to look at all of the factors. While USA World News and Report also predicts that rates will come down close to 6%, they have reported that even though the spring and summer housing markets are off to a slower start due to some people trying to “wait out” the current market conditions, on a national level the number of homes under contract has been lower than this time last year it is getting closer to evening out. However, due to the uncertainty of the economy, it is helping to put more buyers in the market at this time. While the economy, mortgage rates, and demand for housing may be all in different places, an abrupt market crash seems unlikely.
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