Yes, interest rates are up. Yes we have more or less slowed our absorption rate. Yes, sales are still happening. The volume of sales is down, but pricing isn't necessarily down. Listings are more or less moving in conjunction with demand. Without a significant jump in inventory, we have no expectation to see a significant drop in pricing.
We had pent up demand and the majority of that demand, aka 10 offers to 1 property, have found their place. So what's happening now? Transactions are still happening. However, longstanding principles within real estate are driving decisions and money. As a result we have huge holes in our market and an over saturation of others. This seems to be the bigger challenge of our market.
With less inventory and challenges to our current supply, buyers have few options to consider and don't have the frenzy of low interest rates to push them into homes that might not be perfectly ideal. So what is to expect of our upcoming market?
The expectation is to see a nominal price correction that is less significant than the overall increase in interest rates. Most speculation for markets like Orange County is to see about a 10% price correction. However, if you're considering a mortgage of a million dollars and you compare the payment on an interest rate at 3.1% versus 6.1%, that's a nearly 50% increase in payment. It would have jumped from $4270/month to $6452/month. This actually speaks very highly to how strong our real estate market has persisted through these changes.
That being said, there is expectation for the fed to continue to increase rates. If that's the case, there might be an argument for buyers to take advantage of current interest rates and negotiate on purchase prices by the 10% that is rumored to occur. I have clients who still have a 4.5% interest rate that they're going to use. I'm looking forward to these clients really getting the best of both worlds. Maybe you can too!!
No comments:
Post a Comment