Is a shift in housing market conditions beneficial to homebuyers? And what does the near future of purchasing power – more specifically, mortgage rates – look like? RE/MAX President and CEO Nick Bailey joined Cheddar News to share his thoughts on navigating real estate in the current climate.
Watch the news segment below:
“I think the most important thing to note of what’s happening with this market is we’re really returning to some level of balance,” Bailey said. “The reality is, we’ve had 125 consecutive months of run-up in pricing. We’ve had an extreme seller’s market like we’ve never seen in history, double-digit pricing appreciation across most of the country – and that’s not sustainable year-over-year-over-year.”
He continued, “Buyers have been put in a position to have a lot of pressure in the last couple of years -competing offers, multiple bids – and [they] are starting to see some relief. There’s more inventory and as sales slow a bit, it is allowing buyers to have more choice. And the competitive bidding is not as strong.”
As the Fed continues to adjust interest rates, homebuyers are keeping a close eye on what that means for mortgage interest rates.
“We’ve only been talking about the 30-year fixed rate right now, at around five-and-a-half percent, up a little bit over last week. But yet at the same time, there are alternate mortgage products [available],” Bailey said.
He points to alternative mortgage options, like a 5/1 adjustable rate mortgage (ARM) for example, as ways for buyers to seek out competitive rates.
“We have to also look at [how] a four or five or six percent rate … is still competitive,” Bailey explained.
The pandemic-induced lifestyle shifts, according to Bailey, are not necessarily short-term – meaning that buyers are likely to continue having more options for location when searching for a home.
“Last year, approximately 34 to 36 percent of people were searching for homes outside of their state. That [was] up to 40% in the first quarter of this year,” he said. “What that data indicates is that people have choice on where they live and where they work. And the idea of having flexibility, of working for a company that’s not just 30 minutes from where you live, is here to stay.”
“I think as long as that’s the case, it is going to offer people more options to find some more affordable markets.”
And while the market is in the midst of a shift from previously heightened conditions, the overall change the housing market is experiencing is slow.
“Parts of the country are returning to more stabilization and we will see house prices adjust accordingly,” Bailey said.
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Written by RE/MAX News
