In recent months, in most of this country, we have witnessed a significant increase, both in the listing and sales prices, of houses in the real estate market. Few, remember, so great, an increase, in recent memory! Even after more than 15 years as a licensed real estate seller in New York State, I am amazed at the level of prices and recent sales! How long will this continue and what can happen in the not so distant future? Many factors are involved, and no one is sure how long this unprecedented record on the Seller’s Market will continue, or what might follow! With that in mind, this article will briefly attempt to consider, examine, review, and discuss 5 key factors and why they matter, as well as how important it is to potential homeowners and buyers. to understand these.
1. Offer and demand: Over time, perhaps the most significant factor affecting real estate and residential prices is supply and demand. How many homes are available, compared to the number of actual, qualified potential buyers? When supply exceeds demand, we call it a Buyers’ Market, and when the opposite is true, sellers have the upper hand! Although we are currently seeing many more buyers than sellers (available homes), this will not continue forever! Historically, real estate is cyclical, and there is no reason to expect that sooner or later this will happen again. When might rising prices and other factors overcome the repressed desire to buy, and what might happen if interest rates rise?
two. Mortgage interest rates: We have been experiencing record low mortgage interest rates for an extended period! This creates the ability, for many, to purchase a more expensive home, because their monthly payments will be lower than usual! Eventually, interest rates, and therefore the real costs of a mortgage, will rise, and how might that affect the broader market going forward?
3. Overall economy: General economic conditions affect consumer confidence and thus create increased activity. Is the economy really strong or is it a side effect of the extended period of shocks and emotions from the pandemic?
Four. Job security/confidence: When the level of job security and our confidence in the consistency and future performance of all related factors, we witness more potential buyers. Also, many homeowners, after the extended period we have experienced, are looking for a change and are seriously considering trying to take advantage of current prices!
5. Specific local area and market: Certain specific areas, regions, and locations are more in demand than others, largely due to ramifications and impacts related to the pandemic, etc.! The immediate impact occurred in the largest cities, which experienced lower prices due to lower demand. How long will this take?
It is usually challenging and difficult to accurately and timely predict the real estate market. How the weather, rising interest rates, and changing outlooks, as well as the inability of some to make the necessary down payment, will no doubt create a changing market!