By Dawn Whalen
Whalen Realty Group at F.C. Tucker Company
The tide is shifting from a sellers’ market to a more balanced market, and the change is taking place at a lightning-fast pace. Between quickly rising interest rates and increased inventory, home sellers now need to exercise more patience to sell their property.
Interest rate impact
The extremely competitive real estate market of 2021 wasn’t capable of long-term sustainability, and it was only a matter of time before the government raised interest rates in an effort to slow down the market. However, the drastic and quick jumps in rates pumped the brakes pretty hard on home sales. While it’s still possible to find a great home and a good mortgage rate, home buyers are now paying thousands more in interest than the buyers in early 2022.
The average 30-year interest rate in January 2022 was 3.22 percent and today is around 5.65 percent. Depending on the price of the home and the down payment, the more than two percent difference in rates this year could equate to $200 to $500 or more dollars spent on a mortgage each month.
Longer list times
Now that home buyers must pay more for their mortgage, they’re being more selective about which property they want and more aggressive in their offers. Buyers are no longer willing to accept list price and forgo a home inspection to purchase a home. Rather, they’ll take an extra day or two to make a final decision and ask for concessions. This change in buyer behavior is opening the door for negotiations on pricing and other terms, which is different from last year.
Rising rates are causing people to re-evaluate the need to move versus the desire to move. This hesitation about moving is contributing to houses staying active on the market longer, and the longer a property sits on the market, the more competition it will have to sell.
Lower prices
It’s too early to definitively say if listing prices will come down, but chances are good prices will start taking a turn, even if it’s slight. As more houses enter the market and listings stay active for longer, it is a possibility that prices will come down. More inventories will increase the chances of home sellers reducing their listing price or starting at a lower price.
The last 12-18 months have kept real estate agents busy, but there is a shift happening in the market and only time will tell what that means in the long run for home buyers and sellers.
Dawn Whalen is owner of Whalen Realty Group, at the F.C. Tucker Company and has worked in residential real estate for more than 17 years. She’s a licensed realtor, broker, is a member of MIBOR and a Homes for Heroes preferred realtor. She can be reached at Dawn@whalenrealtygroup.com.
