Navigating the Changing Real Estate Landscape – What You Need to Know

By: Kaitie Moore Underwood | REALTOR®, Blue Collar Commercial Group

Real Estate in a Nutshell The Federal Reserve’s decision to maintain current interest rates while forecasting robust economic growth has stirred the real estate market. Mortgage rates are hovering near recent peaks, and transaction volumes are tapering off, yet home prices continue to climb in most areas.

Builder confidence has dipped for the second consecutive month, with the Housing Market Index falling below 50, signaling bearish sentiment for the first time since December 2022. Housing starts saw an 11% month-over-month decrease in August, with single-family home starts only dropping by 4%. Existing home sales for August dipped slightly month-over-month, but median sales prices are up by nearly 4% year-over-year.

Understanding Buyer Barriers A recent survey by the National Association of Realtors (NAR) sheds light on the challenges prospective homebuyers face. The top reasons for delaying a home purchase include an inability to find affordable homes (34%), waiting for mortgage rates to drop (18%), and hoping for lower prices (9%). Over 25% of respondents are banking on market changes, but home prices are steadily rising across the board.

Saving for a down payment can be a hurdle for many, with 28% citing credit card debt and car loans as hindrances. Homebuyers in this situation may benefit from discussing debt consolidation strategies with lenders, potentially saving on overall interest payments.

Realtors Confidence Index While confidence among Realtors is dwindling, competition in the market remains fierce. Only 11% of surveyed Realtors anticipate an increase in buyer traffic over the next three months. The homes listed for sale continue to attract high levels of competition, with 72% selling in less than a month, and 31% selling above the listing price in August.

Fed’s Take The Federal Reserve has maintained current interest rates, with the federal funds rate targeted between 5.25% and 5.50%. Although this marks the second time rates have remained unchanged this year, Fed Chairman Jerome Powell has given no indication of a rate freeze. While the economy is growing solidly, inflation remains a concern. The median forecast for the end of 2023 is 5.6%, implying another rate hike before the year ends, with a forecast of 5.1% for the end of 2024, suggesting the possibility of two rate cuts in 2024.

Mortgage Market Following the Fed’s decision, average 30-year mortgage rates are nearly at recent highs of 7.49%. Lower mortgage rates would enhance both affordability and availability, benefiting both buyers and sellers in the real estate market.

In Closing In a real estate market marked by shifts and uncertainties, staying well-informed is your greatest asset. A good Realtor, like those that make up the Blue Collar Commercial Group, will empower you and help you to understand buyer obstacles, market trends, and the influence of economic factors. As the landscape continues to evolve, let us be the compass that guides you through these changes.

(Source: Scott Bradley Brixon of Keeping Current Matters)