The big news in real estate over the last few months is rising interest rates for home loans, but in the last few weeks, interest rates dropped again by almost 1/2%. If you have been looking to buy a home for the last year, there is no better time than right now.
Inventory levels have increased by 9% across Houston, so not only do buyers have more homes to choose from, they need to jump on the lower interest rates while they last.
We are still in a Seller’s Market, and while the market is cooling, prices are stabilizing, not dropping. What does this mean for a home buyer? Buyers should not have to offer 10% above the list price to purchase a home today, which is a big relief for the buyers who have lost out on multiple offers over the last year because they did not want to pay way above the market price. The buyer frenzy that we have seen over the last 18 months due to low inventory and interest rates is cooling.
What do higher interest rates and inventory mean to sellers? First of all, with a 9% increase in inventory, we still have low inventory levels with only a 2 month’s supply. Keep in mind that a healthy inventory level in Houston is 3-4 months and 5-6 months in the rest of the United States. When inventory levels in Houston exceed 4 months, we will be in a buyer’s market, but for now, we are still in a seller’s market.
However, sellers should be cautious when pricing their homes today. Overpriced homes are not selling like they were 6 months ago, and we are seeing those home prices dropping. Work closely with a real estate professional to determine a realistic sales price before listing your home to avoid long market times. Buyers are being more cautious as the news is heeding that real estate prices will drop soon.
Remember, the buyer’s affordability factor has dropped, so the luxury market could be impacted as interest rates rise. A $700,000 house purchase today with 20% down payment will result in the same monthly payment as an $800,000 house purchase with 20% down payment did last year.
Whether you are a buyer or a seller, there is no need to panic, but you will need the guidance of a real estate professional to help navigate through a changing market.