It is a sellers market while buyers may face rising interest rates.

By Katie Severance on August 12, 2021

There is no question that today is a sellers' market for residential real estate. The burning questions are: Why? How long it will take? Should Sellers Sell Now? And finally; Should buyers wait to buy? First, it has become a sellers' market as both inventory levels and interest rates are at historic lows. One of these factors alone would drive prices up. Together, they have sparked a strong sellers market and an explosion of buyers looking for more personal living space – largely due to the COVID-19 pandemic. With too few homes fueling competition, buyers can afford to offer more and drive prices up because it's so cheap to borrow.

How long will it take? The market may have already cooled. In the four-week period ending May 30, pending sales, asking prices, and mortgage applications were all down. The number of offers has also cooled.

Many buyers have left the market (if only temporarily) because they are tired of being outbid door-to-door. Some buyers say, "I don't want to play anymore; It's exhausting and I'm afraid to overpay. "Others take a break to enjoy life again, hopefully the worst of the pandemic behind them.

They will return, however, as both interest rates and new listings will rise over the next 12 months, which will bring more equilibrium to the market. In addition, new housing permits will be applied for in 2021. And urban housing values ​​in some cities (think New York City, Los Angeles, and Chicago; but not cities like Miami or Austin) have plummeted and will create new home ownership opportunities.

So should sellers sell now if they can? The answer is yes. Real estate professionals can't imagine a hotter market in 2022 than in 2021. Nobody predicts a crash. But the common belief is that sellers will make more net profits this year than the next as more offers come on the market and interest rates begin their steady rise.

It is not so easy to determine whether buyers should buy now or wait. Many buyers mistakenly believe that they can save more money by waiting for the market to cool off. However, rising interest rates are the single most important factor in determining affordability. It is very difficult to "oversave" the pace of interest rates.

To illustrate that for every full point of the rate hike, purchasing power drops by about 10%. So if a buyer starts looking for a $ 500,000 home and prices go up one point during their search, they can now only afford a $ 450,000 home. It's difficult to save more than $ 50,000 that quickly. So waiting is probably not advisable. For buyers taking out a mortgage, it is likely better to go hunting for the right home while interest rates remain low.

About the author

Katie Severance is the author of "The Complete Idiot's Guide to Selling Your Home" and "The Brilliant Home Buyer: 101 Tips for Buying a Home in the New Economy"

For more business news, visit NJB News Now.

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source https://seapointrealtors.com/2021/08/12/tips-for-todays-home-sellers-and-buyers/

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