The Rollercoaster that We Call the Real Estate Market
By Thomas Haught
Is real estate still hot, or not? Are current real estate trends good, bad or somewhere in between?
At the beginning of the COVID-19 pandemic, the general assumption was that the real estate market was going to suffer. That did NOT happen. Instead, we saw one of the strongest real estate markets (if you were a seller) in generations. Interest rates were lower than at any time in history, and outdoor and home office space suddenly became important. But low inventory meant serious bidding wars. Any local realtor can tell you of listings hitting the market at breakfast time and the seller sifting through dozens of competing offers before lunch.
The potential problem with that frenzy? Buyer regret. Buyers were forced to compete and overpay. Now that the COVID-19 fires have cooled, and interest rates have heated up, buyers are left with that uneasy feeling of living in a home that has a market rate far less than the buyer’s outstanding mortgage. Couple that with a cooling economy and thoughts of the 2008 real estate crash come to mind.
However, Gardi, Haught, Fischer & Bhosale Ltd. does not predict another crash. Before COVID-19, mortgage interest rates were slowly rising. The massive drop in interest rates during COVID-19 was a temporary lifeline to keep at least some sectors of the economy healthy. That benefited both sellers (undoubtedly), as well as buyers (so long as the buyer paid close to the market value). But even current rates are both reasonable and drastically lower than historic highs.
The need for housing is ever-present. Sure, buyers flocked to buy houses when interest rates were 3 percent, but buyers also bought houses when interest rates were in double digits. At the time of writing this blog, interest rates hovered in the mid- to high-6-percent range. In the late 1970s and early 1980s, if you told someone they could get a mortgage at 6 percent, they would laugh you out of the room. While there is always a lag on buyer expectations on how much it costs to purchase a home, that paradigm has never failed to shift.
If you have questions related to buying real estate, contact the lawyers at Gardi, Haught, Fischer & Bhosale Ltd. for guidance by clicking on the free case evaluation button below.