A Realistic Analysis for Prospective Buyers and Sellers:
As seasons change, potential homeowners start perusing listings with photo-worthy kitchens, picturesque backyards and ensuring their finances are in order. Sellers apply a new layer of paint on walls and finally get to those projects that they had been intending to do since they moved in. Meanwhile, a real estate agent somewhere is staging and lighting candles for an open house ready for new clients to walk in. this is typically the property market in Columbus Ohio.
As we enter the spring housing market of 2023, things feel much different than they have in previous years both pre and post pandemic. Last year saw a wild cycle of growth and decline within months of each other, so now everyone is wondering if the real estate market will bounce back just in time for the prime selling season. It remains to be seen what the outcome will be.
Will the traditional “For Sale” indications make a reappearance in the yards all around the city, and will the purchasers take advantage of the opportunities presented by them in spite of the daunting cost of the properties? The answers to these questions could have a long-lasting effect on the housing market.
The past few months had been very challenging for the market, with inflated prices and elevated mortgage interest rates deterring prospective buyers. Sellers had no motivation to put their homes up for sale, when it meant lowering their asking prices and especially having to purchase another house with a higher mortgage rate. This resulted in a considerable drop of new listings and home sales.
The mortgage rates had previously gone down to the low 6% range, prompting an influx of buyers. However, with interest rates increasing to 7.1% on Thursday and just below 7% on Friday (according to Mortgage News Daily), the number of new listings is shrinking and the promising start to the usually hectic spring real estate market is now being threatened.
It is still unclear when exactly better times will arrive, if at all. While the housing market in springtime is expected to be surely more active than in winter, it is now predicted to be slower than it was during the peak of the coronavirus pandemic and before it was a global issue. This is expected, but the new “normal” doesn’t feel quite so normal.
In February, Realtor.com® data showed an increase of 67.8% in the number of homes for sale from the year before. Nonetheless, potential buyers should not be overly thrilled as a majority of these dwellings have been sitting on the market without being bought, likely due to needing repairs, being outdated, costing too much, being far away, or having little to no exterior charm.
In contrast, properties in desirable areas that beautiful and move-in ready are still experiencing bidding wars and are being sold for prices higher than the asking price. Certain areas with desirable schools and good quality homes will still be highly sought after, resulting in bidding wars. However, this won’t be the usual.
What will the standard be in the real estate industry?
Future buyers should be aware that there will be a limited amount of affordable, move-in ready homes in the marketplace and a great deal of rivalry for those that become available. Predicted interest rates will stay in the middle of 6% and 7%. Home values may decrease in specific areas, but they are still likely to remain higher than they were prior to the outbreak of the pandemic, which will make it harder and more expensive for people to buy.
For those who obtain a mortgage to purchase a home, the cost has increased by almost half since last year. This calculation was based on the median list price in February and a 20% down payment, in addition to utilizing the 30-year fixed-rate loan rates from Freddie Mac from both the current and the previous year. Mortgage rates will remain a major factor in the housing market.
A severe lack of housing has become apparent
This spring, many potential buyers with dreams of owning a home will be disappointed as the housing market can’t accommodate their wishes due to the lack of available homes.
Homeowners who were ready to sell may not be willing to do so. As they witnessed the huge influx of home suitors for their neighbors’ open houses and found out that the person three houses away sold their property for an extraordinary amount in the past year, they may still want to hold out hope for that market to come back. Even if the current, buyers can’t manage to pay the same prices at the increased mortgage rates and homeowners may not be prepared to accept less. It could take them some time to accept the changes and level out their expectations.
Furthermore, numerous sellers are tied to mortgages with 3% or below interest rates. If they purchase or sell a different place, most will need to get mortgages with bigger rates, which will cause them a hefty amount more each month, which sellers may not be willing to do.
Nevertheless, selling a property that is move-in-ready in a desirable area has its positives as well.
Despite the need for more housing, builders are not eagerly entering the scene. Rather than hastening to construct more dwellings, they are largely dwindling in their activity. Elevated interest rates have made it costlier to build additional homes–and have drastically reduced the amount of people able to purchase newly-constructed homes.
The number of new homes expected to be built this year will be lower than normal, resulting in an even greater housing deficit across the country.
Home cost are now more expensive for buyers to manage for the property market in Columbus Ohio.
Consumers are coming to terms with the fact that low mortgage rates of 2% and 3% are not coming back anytime soon, yet some are still pressing on. Many are anticipating that interest rates could eventually fall by one or two percent, and they will be prepared to refinance their mortgages when it happens. Date the rate, marry the house.
According to some economists, when the Federal Reserve gains a handle on inflation, mortgage rates should start to decrease during the latter part of the year. This is because as the Fed has been increasing its rates, the rates for mortgages have also been rising. However, when the Fed stops hiking its rates, it is anticipated that the mortgage rates should dip.
In the week that ended on Feb. 24, the Mortgage Bankers Association reported a 44% decrease in the number of people requesting mortgages. This represents the lowest demand for mortgages in the last 28 years.
Though this could be misconstrued, the property market in Columbus Ohio has seen a lot of growth over the past few years, so the decrease is not relative to what may be considered a typical year. Furthermore, numerous economists hold the opinion that home sales have already hit their lowest point, thus the possibility of them rising is the only option.
Home prices remain a puzzling question.
The main concern for both buyers and sellers is the projected trend of home prices in the future property market in Columbus Ohio.
The pandemic saw a surge in home prices as the number of homes available was less than demand and mortgage rates were reduced, providing buyers with increased buying power. This was beneficial for buyers as their monthly payments were reduced, giving them the opportunity to use the extra cash to purchase more expensive homes.
The equation has been altered by higher fees.
Experts agree that the housing shortage will likely keep prices high and could cause them to start increasing again. In regards to whether or not prices will rise or fall, they differ on the topic and believe it will vary greatly depending on the market. Areas that experienced growth during the pandemic could be more prone to a harsher decrease.
Despite the potential for a slight reduction in prices, the majority of the savings will be offset by the increase in mortgage rates. Additionally, the housing deficit persists, making it difficult to discover a residence that corresponds with the buyer’s requirements.
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Because of all of these factors with property market Columbus Ohio, using brokerages like ours here at Sell for 1 Percent, make it vital to get the most out of your realtor while also saving money. Keeping that extra 2-4% commission in your pocket could be the way to afford your next home despite the rising home prices and interest rates. Call us today to see what we can do for you!
