The real estate market has been wild for the past couple of years, but many are wondering if it’s finally starting to slow down. If so, this would be a long-awaited reprieve for buyers and a wake-up call for potential sellers, as the tide may be turning away from their favor.
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While 2022 was the housing market’s hottest March ever, 12% of homes had a price drop during the four weeks ending April 3, according to Redfin. This likely has something to do with rising interest rates, which reached 5.27% for the week ending May 5 — the highest level realized since the early aughts.
If you’re planning to buy or sell a home this year, you’re probably wondering what this means for you. Several real estate agents have weighed in to explain how you could be affected.
Don’t Expect Things To Drastically Change
“What many people need to remember, including real estate agents, is all real estate is local,” said Bill Gassett, a realtor with Maximum Real Estate Exposure, based in Hopkinton, Massachusetts. “What may be happening in one part of the country might be completely different in another area.”
Personally, he said there’s been little to no change to the extreme seller’s market in his area of Massachusetts.
“Prices are not being dropped here, because demand still outweighs supply by a significant margin,” he said. “We have record-low inventory. It has increased slightly over the last few weeks, but nothing that is earth shattering.”
He said that eventually rising interest rates will spark a change, but it’s not likely to cause a rapid reduction in prices.
“The first stage will be, instead of getting 10 offers on a home, there will only be three,” he said. “The home won’t sell $75,000 over the asking price, but something closer to $25,000.”
Ultimately, Gassett said a transition into a more balanced market won’t happen overnight.
“For buyers, it will be a welcome relief because it has been hell over the last few years,” he said. “For sellers, they will have missed out on one of the best economic housing booms of our lifetime.”
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Buyers Might Not Have as Much Competition
Trey Langford, a real estate agent with Build Idaho, based in the Boise, Idaho, area said the frenzy in his local market is slowly starting to decline.
“Now it takes two weekends to sell a home,” he said. “The market is still hot, just slowing down from 100 mph. Last spring it seemed like every home had eight to 20 offers and now it seems like buyers are only competing with two other offers.”