By Johanna Wiseman
What’s going to happen in the real estate market? We’d all love to know!
There are signs of change. We have had several years of limited inventory, competitive bidding, and rising prices in our area. These conditions reflect national trends, but locally we have experienced an intensity greater than average.
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Two main factors influencing potential change in the real estate climate are interest rates and inflation. Higher interest rates and increased cost of living combine to affect how much a buyer can afford to borrow. Borrowing power affects the speed and level of sale price acceleration. Cautious buyers could decide to step back from their searches and wait to see if prices level off, or even decline. If there are fewer buyers in competition for homes, the price-escalating bidding wars may happen less often. Both buyers and sellers will have to adjust their expectations, with guidance from their trusted real estate professionals.
In general, it’s been so difficult to secure housing, with such a scarcity of affordable options, that some owners and renters have decided to stay put rather than risk the challenges of moving. If the trend grows, demand and activity will decrease. This is not necessarily negative. In reality, a cooling-off period could influence the pace and sanity level of real estate transactions for the better.
I don’t have a crystal ball, but I predict we are heading for a modest correction. Now that note of caution has crept into the general attitude about real estate, there will be less of the bullish behavior we’ve seen in recent years. In other words, homes for sale will be priced less aggressively high, at prices closer to other recent sales, in order to appeal to more financially careful buyers. Buyers may still compete for the best homes, but the offer prices will no longer exceed the asking prices by tens of thousands of dollars. Home prices and values will continue to appreciate, but not as sharply as in the past two years. Regarding timing, it would be nicer for everyone to have less pressure and more time to consider their options before acting.
I do not expect a catastrophic crash. As I have written in past articles, there will always be reasons to buy, sell, and move that transcend current events and the economy. Jobs, health, aging, death, birth, household size, divorce, marriage, and other life changes continue to drive our decisions about where to live. The world keeps on turning.
Local expert Johanna Wiseman of RE/MAX Preferred Professionals can be reached at 908-705-0652, or visit MyBridgewaterHome.com