For several years now, we have experienced the Real Estate market grow stronger and stronger. More specifically, in the last two years we have seen the most rapid growth in history. In January of 2021, the average sales price for a U.S. house was $383,000, and now we are looking at about $507,800 (a 32% increase).
Changes in the economy are starting to affect buyers and sellers, too. As inflation climbs to new heights that we haven’t witnessed in 40+ years, interest rates also steadily climb to combat the everyday price hikes that every American is facing. From paying more at the gas pump, to more at the grocery store, to more on our credit cards, the cost of everything is increasing. You might think this is enough to cause the housing market to go stagnant, but it’s actually quite the opposite.
Instead, buyers are jumping into full gear, trying to take advantage of the still relatively low interest rates. We are currently sitting at a 5.5% interest rate that many are predicting will soon rise into the 8% range. Potential homeowners are eager to get their name on a Deed before rates climb higher and they are priced out of the market. This demand is driving what is now a ridiculously competitive atmosphere, where most houses are selling right at or above asking price- which is already much higher than they have ever been before.
What is driving demand even more is a growing number of out-of-state buyers looking to move here. We are seeing lots of people coming from places such as California, where the average prices are significantly higher, and since houses are so much cheaper here they have no issue paying asking price or above asking price- before they ever see the house.
Sellers are starting to notice the trends and more are starting to feel comfortable selling while many believe we are at the literal best time to sell ever. Not surprisingly, experts are also predicting with rising rates we will see less competition, as many buyers are priced out of the market. Many homeowners are seeing this as a golden opportunity to cash out on their biggest asset, and buy back in once competition has dropped off and prices have stabilized.
Those are some things I have picked up on as a local REALTOR. I hear lots of people predicting we are in a “bubble” and I disagree. A bubble implies that there will be a pop, or a crash. I don’t foresee a crash as we have already seen massive economic changes and yet real estate has not even began to be affected yet. There is also still going to be lot’s of demand as more people than ever need houses, more people than ever are moving from huge densely populated states to states like ours, and rental rates are also at an all time high, which will encourage more people to own as well. These are some reason I am not afraid of a market crash, but I wouldn’t be surprised if we did see a correction and demand die off. I actually have buddies who believe that prices will stabilize, but don’t think prices will ever drop again due to growing populations that need places to live and construction prices steadily rising.
My biggest point in the last paragraph is that I would not be concerned if you recently bought a house. Even if prices do go down, real estate throughout history has proven to correct itself and appreciate in value. You might lose equity in the short term, but in the long term it will all work out.
If there is ever anything I can help with, please don’t hesitate to give me a shout! I am happy to help in any way that I can. You can reach me anytime by phone or text at (828) 855-6514.
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