Over the past few months, there have been some abnormalities in the real estate market that are still happening today. For instance, despite rising mortgage rates and an increase in the number of homes available for sale, which would normally put downward pressure on home prices, home prices have continued to grow. Simply put, market conditions are constantly changing, frequently inexplicably, so you must stay informed about what is happening in the market. So read on to learn what Houston buyers and sellers should know about the market.
The Market Is Slowing
Houston buyers and sellers should first be aware that, with respect to market conditions, the market appears to be slowing some.
Industry observers claim that “housing-market activity has already taken a considerable downturn” as a result of “the cumulative impact of rising mortgage rates, greater property prices, and worries of recession. The third quarter is expected to be marked by year-over-year decreases in home sales as well as a slowing of home price increases. Slower demand is likely to persist during this period. Additionally, price reductions are likely to increase as sellers adjust to the reality of weaker buyer demand as well as seasonality.
Inventory Remains Low
Despite continued high buyer demand, inventory has been pitifully low and continues to be so. And if the trend in market circumstances is waning, it doesn’t seem to be going away anytime soon.
As an example, the total number of unsold homes on the market in November 2021 decreased by more than 16% as compared to the same month the year prior. Many people were wanting to buy due to a number of contributing causes, one of which was the fact that fewer people were selling, but there simply weren’t enough homes available to satisfy that demand. And the market is still experiencing this trend of low inventory.
Therefore, buyers must be ready to move swiftly because homes will be snapped up rapidly. Because they won’t have a lot of options for housing, they could also have to compromise on some wants and focus more on necessities. Experts advise buyers to broaden their search parameters and to ensure that they are pre-approved for a mortgage before starting their search.
Low inventory is good for sellers because it means there will be a lot more buyers vying for their properties and they will probably receive many competing offers. Additionally, sellers who may have had trouble selling their homes in a buyer’s market now have a much better chance of doing so.
Prices Are Still Rising
Although the rate of price increases has slowed, home prices have been skyrocketing. Prices will continue to rise, but observers of the industry anticipate a slower rate of increase—at least slower than in 2021.
Due to the current market trends, buyers must absolutely figure out how much house they can afford, especially when taking into account the rising mortgage interest rates. If you’re a buyer, you must determine your home-buying budget and then adhere to it without being influenced by rival buyers who are undercutting you. Additionally, it is advised that you save at least 10% to 20% of your monthly income for a down payment and that you keep your mortgage payment to no more than 25% of your gross monthly income before moving. A 15-year fixed-rate mortgage can also help you offset the increased price because it will cost you thousands less in interest than a 30-year or adjustable-rate mortgage.
These rising property prices will probably result in a sizable profit for Houston sellers when they sell. The expenses for the upgrades they must make to help their home sell will subsequently be recouped. You will still need to wait for the best offer if you are a seller, though. Even if buyers could be in a hurry, negotiation and planning are still necessary.
Be sure to contact a Houston agent at (713) 866-4000 to find out how to get the best price and best offer in your market.
Some Conclusions for Buyers and Sellers
So let’s draw out some conclusions about the current market conditions and how they affect Houston buyers and sellers . . .
More inventory is entering the market, but this is still a seller’s market, according to industry analysts. In order for equilibrium to occur, the United States would require even greater inventory. But prospective purchasers shouldn’t always remain on the sidelines. Those buyers who have missed out on numerous contracts over the past two years could wish to reenter the market. The bidding wars of the previous two years are unlikely to occur, and there will be less competition.
The experts also advise sellers to start tempering their expectations even if they may still be in a strong position. It’s critical for sellers to have reasonable expectations for asking prices. The key is to exercise patience because there are still plenty of potential buyers.
Dealing with Market Conditions
The real estate market is still not completely back to normal, and the current circumstances make predictions challenging. This basically means that both buyers and sellers must use the services of an accomplished Houston agent. Call us right away at (713) 866-4000 if you’re prepared to succeed in this market.