In the past – several months, in most parts of this country, we have witnessed, a significant increase, in both, listing, and selling prices, of houses, on the real estate market! Few, remember, as large, an increase, in recent memory! Even, after, over 15 years, as a Real Estate Licensed Salesperson, in the State of New York, I am amazed, at the level, of recent prices, and sales! How long, will this continue, and, what may occur, in the not – so – distant future? Many factors, are involved, and no one, is certain, how long, this record, unprecedented, Sellers Market, will continue, nor, what might follow! With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 key factors, and why they matter, as well as, how important, it is, for home owners, and potential buyers, to understand these.
1. Supply and Demand: Over – time, perhaps, the most significant factor, affecting real estate, residential pricing, is Supply and Demand! How many houses, are available, as opposed to, the number of true, qualified, potential buyers? When supply exceeds demand, we refer to it, as a Buyers Market, and when the opposite occurs, sellers have the upper – hand! Although, we currently, are witnessing, many more buyers, than sellers (houses available), this won’t go – on, forever! Historically, real estate is cyclical, and there is no reason, to expect, sooner, or later, this will again, occur! When might rising prices, and other factors, outweigh, the pent – up, desire to buy, and, what might occur, when/ if, interest rates, rise?
2. Mortgage interest rates: We have been experiencing, record – low, mortgage interest rates, for a prolonged, period! This creates the ability, for many, to buy a more expensive home, because, their monthly payments, will be lower, than usual! Eventually, interest rates, and, thus, the true costs, of a mortgage, will rise, and, how might that impact, the overall market, into the future?
3. Overall economy: Overall economic conditions, impact consumer confidence, and, thus, creates greater activity! Is the economy, really, strong, or is this an after – effect, of, the prolonged period, of pandemic impacts, and emotions?
4. Job security/ confidence: When, the level of job security, and our confidence, in the consistency, and future performance, of all, related factors, we witness, more potential buyers! In addition, many homeowners, after the extended period, we have experienced, seek, both a change, and seriously, consider, trying to take advantage of today’s prices!
5. Specific local area, and market: Certain areas, regions, and specific locations, are, more, in – demand, than others, largely, because of the ramifications, and impacts, related to the pandemic, etc! The immediate impact, occurred, in larger cities, which experienced, lower prices, because of less demand. How long will this occur?
It is generally, challenging, and difficult, to accurately, predict, and time, the real estate market. How, time, rising interest rates, and changing perspectives, as well as, the inability, of some, to come – up, with the necessary down – payment, will certainly create a changing market!