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If you are thinking of buying a home, the 2023 housing market promises to be especially challenging to navigate. Here are 3 reasons why, and how you should respond.
Interest rates affect real estate. What affects interest rates?
By now, we may all have heard so much "rate hike" talk that we are numb to it. But for real estate, interest rates are one key indicator of whether we will find ourselves in a sellers’ market or a buyers’ market. This week and next are going to be big for the rates market and for the spring real estate market. Here's why! It would be easiest to jump on the dooms day band wagon and predict a housing market crash. After all, no one criticizes pessimists when markets perform better than they predict. We aren’t as kind to those who overshoot with rosy predictions, though.
Yet the reality I see in the housing market - as the factors stand today – is promising. So allow me to put my head on the chopping block and suggest that the housing market may see a soft landing this next recession rather than the crash and burn we saw in 2008. A big reason why?
My short answer is "not much" over the next few weeks. A couple months back, I posted about the Fed's signaling four, 25-basis point hikes across 2022. At the time, that scenario would cost a $300,000 buyer about $200 extra a month. While no one is jumping up and down to pay an extra $200 a month, this increase may not be significant enough to deter the majority of buyers seeking the benefits home ownership affords. If buyers don't exit left at the home buying shopping mall, then there won't be a significant slowing of market demand for housing and we won't see a major shift in the market's competitiveness in the short run. Where you may see some impact in real estate in the next several weeks is in new construction. If developers are paying more in financing costs for their materials and services, the cost will be passed down to the consumer.
Interested in how these rate hikes impact your wallet in other ways? Check out this article on the basics. Never want to miss a post? For more useful real estate tips & tricks, subscribe to my mailing list or contact me with any real estate questions. Kat Medaries, REALTOR® Long & Foster Real Estate, Village of Midlothian Sales Licensed to sell in the Commonwealth of VA / Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice. Seek the assistance of a professional should you require. |
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