While sensational headlines and opinion pieces may discourage homebuyers from entering the market, the trendlines indicate there are many positive reasons to get off the bench and make your search for a new home, a reality. For those who may have felt discouraged scouring listings in early 2022, and hit pause as the market shifted in the second half of 2022 or those who are simply ready to make their next move—there are plenty of considerations to make as you take the next step on your real estate journey.
Here are four factors that are creating this golden opportunity for buyers.
More Inventory, Ideal Pricing
- Would-be sellers are preparing to load a spike of new listings on the market, timed with the spring sales season. Most are pricing their listings more reasonably in hopes to win the buyer and be comparable to similar homes sold, which means the listing prices are generally lower than they were a year ago.
- Developers of high-profile projects are “marking to market” this spring with dramatic decreases in prices, but once this inventory is gone, so is the opportunity. (There is a dearth of new supply for several years to come because new for-sale projects do not pencil to break ground).
Fewer Buyers, Less Competition
- Higher interest rates have limited accessibility for some buyers because the requirements for prequalification are more challenging and their purchasing power has been reduced. This will mean less competition for those who do still qualify for loans, fewer bidding wars to drive up prices, and more opportunities to negotiate with sellers.
- A variable stock market with depressed share prices is decreasing the “wealth effect” so more consumers are less likely to sell stock to come up with a down payment (renters in the tech industry holding RSUs generally believe their stock value will rise faster than property prices so they “renting and holding” instead of entering the housing market).
The Economic Picture
- Indications are that the “bottom has passed” in the local real estate community and eventually, the media headlines will catch up and replace the stories about declining prices.
- The media headlines will be relentless for the next 90 days given the year-over-year home price decreases are already baked in. (S&P/Case-Shiller reports two months behind the current market.)
- Most market pundits believe that 2024 will be a strong year for housing given it’s an election year, stocks are expected to rise, mortgage rates are expected to lower and overall consumer confidence will be improving.
- Overall economic fundamentals are anticipated to continue to improve. This is especially true in the in-city markets as the disruption from the pandemic is in the rearview mirror, employers are starting to require workers to return to urban offices, and more amenities, restaurants, and lifestyle attractions will open.
Don’t Wait for a Bottom that’s Already Passed
- If mortgage interest rates drop in the second half of 2023 as predicted, and it’s become clearer in the headlines that home prices have bottomed, sellers will be more aggressive with asking prices and more buyers will enter the market to compete in a rush to the field.
- It is predicted that inflation will be dampened by mid-2023, and it’s likely that the U.S. economy has been in a recession but has pulled out, triggering a media storm for a new housing cycle, after the bottom has already passed.
- The Fed may be trying to stimulate the economy following a recession in 2024 (and amid political agendas coinciding with an election year) with lower bank rates. Buyers that secured higher mortgage rates in 2023 will begin refinancing, and more buyers will step into the market.
Having conversations with industry experts as you examine your finances and your real estate goals is key to determining what’s right for you. Real estate advisors are following the trendlines and mortgage lenders who can walk through pre-approval with you can break down the numbers so you know what you’re spending, and where you can save.
If you’re ready to connect with a local expert, reach out to to start a conversation with a real estate advisor today.