Residential and commercial real estate is really feeling the pain and is in a recession. Rates jumping another 1% over the last month is killing the demand for buyers at this time. Deals are not making sense and with high rates buyers are sitting tight. Inventory in markets around the country is rising more and more because properties are starting to sit on the market and fall/winter is always a slower time for buyers. High rates are really the issue and buyers are not that interested in buying until rates come back down.
The good news is buyers can start to identify and pick up lower-priced deals while rates sit high and buyers are not showing up. This is an opportunity for first-time home buyers to find properties sitting or maybe falling out of escrow to get a deal. What is a deal, lower price, closing cost paid for, buy down rate, and the list goes on. Sellers like last year will have to get creative if they are not selling their property. There are still submarkets that have little to no inventory and they are still seeing bidding wars and buyers overpaying.
Everyone wants to know when rates will come down because that is the main pain point for every buyer right now, right? Actually NO, there are cash buyers out there that don’t care about rates and they are ready to buy. They are looking for better deals and some are just looking to buy their dream home and rates have nothing to do with their decision.
When rates do come down, millions of buyers will enter the market, and depending on demand it will be very interesting to see how all these markets in the US do. Up, down, flat, no one really knows what will happen to values. Supply and demand is always the equation that answers that question. When I talk to everyone I know in real estate all over the country it seems to be the same conversation and they are ALL seeing the buyers pulling back and waiting. Deals are always closing, refi’s, and purchases. The market is always active, there are fewer deals trading at this time but that can always change just like rates can always change.
Rates drop just 1% back down and you will see a different market. How do we know, because rates have been on a rollercoaster ride and we in real estate have a front seat. We see the buyers come in and out of the market depending on where rates are at. If you are a buyer, make sure you are ready to go, pre-approved, and when the time is right for you to move fast. It is still very competitive in many markets and when rates come down the competition always heats up.