Over the past few months, the real estate market has been unusually volatile, with mortgage demand going up and down in accordance with a number of factors. The most notable factor has been interest rates, which have generally been on a decline since their peak in October, but which have ticked up slightly in recent weeks. The result is a significant amount of uncertainty in what will happen to the market over the course of the coming year.
What is the Real Estate Market Like Now?
The current real estate market is in an uncertain state. On the one hand, interest rates are down to 6.32%, compared to the high of 6.95% back in October, and homebuilder sentiment is also much higher than it previously was. On the other hand, the amount of available inventory is still quite low, as people have refrained from putting their homes on the market and the number of new homes being built is still fairly limited.
Why is the Market Like This?
There are a number of factors that are contributing to the current state of the real estate market. First and foremost, there is still significant pressure on the market due to high interest rates from the Federal Reserve, which has continued to raise rates to combat inflation. This has also caused the number of people seeking to refinance their mortgages to decline, which is down around 76% compared to the same time last year.
What Could Happen in the Future?
What happens in the near future is difficult to say. While homebuilders are predicting a rise in the number of people seeking new homes to buy, houses still face an affordability issue due to high prices and high mortgage interest rates. Much of the health of the market will depend on whether interest rates will continue to remain high, or if it will start to decline as inflation comes under control.
How Could This Affect You?
If you are looking to sell your home, there is a decent chance that you will be able to find a buyer, although you are unlikely to find a market as competitive as it was in early 2022. Buyers, meanwhile, may struggle to find homes that fit within their price range, once they take into account the increased cost from high mortgage interest rates. If interest starts to follow a downward trend once more, it could lead to the market picking up once again, which would benefit buyers and sellers alike.
