By Andrew Augustyniak | People’s Mortgage
After one of the most dramatic real estate bear markets in history, the real estate market has recently taken a distinguishable turn. More and more indicators are pointing to an ease in the real estate market, meaning that investors who chose to wait out the hot market since the beginning of the pandemic could be in for a long-awaited reward in the near future.
Indicators of a softening market
- Price Reductions
- Less Mortgage Applications
- Lower Anticipated Price Growth
Inflation has been a crucial deciding factor in the quickly changing housing market. While the fed continues to combat the 40-year record high inflation rate, mortgage rates continued to climb aggressively all through the first quarter of this year, although there was some relief when weekly mortgage rates slightly dropped in July. However, with rates being much higher than the unrealistic rates we saw through 2020 and 2021, we are seeing that they have been a contributing factor in slowing the markets down.
Further, more home sales are falling through now than at any other time since the start of the pandemic. According to a report from Redfin (https://www.redfin.com/news/home-purchases-fall-through-2022/), 14.9% of pending home sales fell out of contract in June. The report suggests that high mortgage rates are one cause leading to the fallout. Depending on contingency periods, some borrowers have run into rate locks expiring, which often changes the equation entirely. While others look to the market for advice, maybe backing out for other reasons, such as waiting for a potential less competitive market.
Because I do not have a crystal ball, I am unsure how much the market will correct. Paying close attention to the changing housing stats and monitoring the recent sale prices can give a better understanding of which markets are starting to show that ease, and which ones aren’t quite there yet.
We are now seeing the long-awaited shift in the market. The sellers are beginning to lose some of the control they have yielded over the past two years as we see homes sitting on the market longer while buyers are starting to gain said power and control in the market. This is great news for investors. There’s no telling where the bottom of this market will be, so as long as you follow the trends and monitor the market you will find the right deals!