A blog post

Why You Might Not Get the Price You Want.

The housing market has been a hot topic lately, and for good reason. With little inventory and spiked interest rates, inflation, job loss, and high rent, sellers are dramatically dropping prices in an effort to catch a proverbial falling knife. This creates an unhealthy market that is difficult to navigate for both buyers and sellers. In this blog, we will explore the current state of the housing market, why it is currently in a fragile state, and possible outcomes.

One of the main issues with the housing market is the lack of inventory. According to the National Association of Realtors, the inventory of existing homes for sale in January 2022 was 1.16 million, which is a 19.8% decrease from the same time last year. This is a result of a variety of factors, including the COVID-19 pandemic, which slowed construction and led to a decrease in new listings. Additionally, people are staying in their homes longer, further reducing the inventory of available homes.

However, demand for homes remains high. This is partly due to low interest rates, which make it more affordable for people to buy homes. The pandemic has also created a surge in demand for homes, as people seek more space and outdoor areas to accommodate remote work and homeschooling. The result is that homes are selling quickly, often with multiple offers, and prices are being driven up.

Interest rates have been at historic lows for several years, but they have started to rise in recent months. The Federal Reserve has been raising rates in an effort to combat inflation, which has been rising at a rapid pace. Inflation is currently at a 40-year high, with prices for goods and services increasing at an alarming rate.

The rise in interest rates means that it is more expensive to borrow money, which can make it harder for people to buy homes. Additionally, inflation can lead to higher mortgage rates, further making it difficult for people to afford homes.

Job loss and high rent are also contributing to the fragile state of the housing market. During the pandemic, many people lost their jobs or had their hours reduced, making it more difficult for them to afford homes. High rent prices are also forcing people to stay in rentals longer, which further reduces the inventory of available homes.

Furthermore, job loss can lead to foreclosures, which can flood the market with more inventory. This can lead to a vicious cycle where more homes are available, but there are fewer buyers due to economic instability.

In response to the current state of the housing market, many sellers are dramatically dropping prices in an effort to attract buyers. However, this can create a feedback loop where prices continue to drop as buyers hold out for even lower prices.

While dropping prices can attract buyers, it can also result in sellers losing money on their homes. This can be especially devastating for sellers who are trying to recoup their investment in a home.

The current state of the housing market can be described as unhealthy. Indicators of an unhealthy market include high demand and low inventory, rising interest rates and inflation, job loss, and high rent. Additionally, dropping prices can create a feedback loop that further destabilizes the market.

An unhealthy market can be difficult for buyers and sellers to navigate. Buyers may feel pressured to make hasty decisions in order to secure a home, while sellers may be forced to accept lower offers than they would like.

The future of the housing market is uncertain, but there are several possible outcomes. One possible outcome is a correction, where the market stabilizes and returns to a more balanced state. This could occur if interest rates and inflation decrease, and if the supply and demand for homes even out. However, this correction could also lead to a decrease in home values, which would negatively impact sellers.

Another possible outcome is continued instability in the market. This could occur if interest rates and inflation continue to rise, if the economy experiences a downturn, or if job loss and high rent persist. This would result in a buyer’s market, where sellers are forced to accept even lower prices in order to attract buyers.

A third possible outcome is a housing market crash. While this is unlikely, it is not impossible. A housing market crash could occur if the market becomes too unstable and the feedback loop of dropping prices spirals out of control. This could result in foreclosures and a flooded market, which would cause home values to plummet.

In conclusion, the current state of the housing market is fragile due to low inventory, high demand, rising interest rates and inflation, job loss, and high rent. Sellers are dropping prices in an effort to catch a falling knife, which can create an unhealthy market. Possible outcomes include a correction, continued instability, or a housing market crash. It is important for buyers and sellers to be aware of the current state of the market and to make informed decisions based on their individual circumstances.