This Market is WEIRD

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Real Estate

The real estate market is currently in a peculiar state, characterized by a combination of rising inventory, longer days on the market, and fluctuating buyer activity. As we move into the fall season, several factors—ranging from interest rates to seasonal changes—are contributing to this unique market landscape. If you're a buyer, this might be the perfect time to make your move.

Inventory is Slowly Increasing, But Homes Are Sitting Longer

One of the most noticeable trends in the real estate market right now is the slow but steady increase in inventory. This is a shift from the last couple of years, where inventory was scarce and bidding wars were the norm. While more homes are becoming available, they are also staying on the market longer. According to recent data, the average number of days on market (DOM) has been creeping up in many areas. This is a stark contrast to the frenzy of 2020-2022, where homes often sold within days, if not hours, of being listed.

The reasons for this change are multifaceted. Many sellers who were hesitant to list their homes during the peak of the pandemic are now entering the market, hoping to catch buyers before the holiday season. However, with the current economic climate and higher mortgage rates, many buyers are more cautious, leading to less frenzied activity and more homes lingering on the market.

Back-to-School Season and Its Impact on the Market

Another significant factor affecting the real estate market is the back-to-school season. As children head back to school, family schedules become more regimented, and the urgency to move diminishes. For many families, the focus shifts from house hunting to settling into a routine, which can lead to a temporary lull in buyer activity. 

However, this slowdown presents a unique opportunity for buyers who remain in the market. With less competition from other buyers, you might find yourself in a better position to negotiate favorable terms. Moreover, with homes spending more days on the market, sellers might be more willing to entertain offers below the asking price, especially if they are motivated to sell quickly.

Mortgage Rates Holding Near Long-Term Lows to Start New Week

Interest rates have been a rollercoaster over the past year, but recently, they've been on a slow decline to balance out at around 6.25%. While these rates are higher than the historically low rates we saw during the height of the pandemic, they are still relatively reasonable compared to the rates seen in previous decades. This stability can be seen as a silver lining for potential buyers; knowing that rates are not skyrocketing allows for more predictability in budgeting and financial planning.

For buyers, this stability in interest rates means it might be a good time to lock in a mortgage rate before any potential increases. With the Federal Reserve closely monitoring inflation and other economic indicators, there’s always a chance rates could go up, but for now, the 6.25% range provides a window of opportunity.

A Buyer’s Market? It Just Might Be

Given these conditions, the current real estate market could be described as slightly leaning toward a buyer's market in many regions. A buyer’s market is characterized by a higher inventory of homes for sale, longer days on the market, and fewer competing buyers—all of which seem to be aligning at this moment. 

This is a great time for buyers to conduct thorough research on their local market's days on market (DOM) statistics. Homes that have been listed for an extended period may indicate sellers who are more open to negotiation. Combine that with the seasonal slowdown and steady interest rates, and you have a recipe for potentially favorable buying conditions.

Other Real Estate Market Facts to Consider

  • Home Prices Are Stabilizing: After a few years of unprecedented price increases, home prices in many markets are starting to stabilize or even decline slightly. This is especially true in markets that experienced the most dramatic surges during the pandemic.
  • New Construction is Lagging: Builders are also feeling the pinch of higher interest rates and supply chain challenges. As a result, new construction is not keeping pace with demand, which could help support home prices from dropping too much even with higher inventory levels.
  • Rising Rents Continue to Affect Buyer Behavior: As rent prices remain high, more people are considering homeownership as a viable option. This could lead to increased demand as more renters look to escape escalating rent costs.

Conclusion: A Unique Time in the Real Estate Market

The current real estate market is characterized by a mix of rising inventory, longer days on the market, seasonal slowdowns due to back-to-school, and steady interest rates. For buyers, this combination presents an opportunity to enter the market with less competition and more negotiating power. 

However, as with any market, it's essential to do your homework. Analyze local trends, consult with a knowledgeable real estate agent, and stay informed about potential interest rate changes and market conditions. With the right approach, you could take advantage of this "weird" market and find yourself in a new home on more favorable terms than in the recent past.

 

Never Too Busy For Your Referrals,

Ken

978-962-1191