With interest rates changing daily, sellers only wanting to sell right now if they 'really have to', and buyers struggling to find a home due to inventory, it can be challenging to have a true grasp on what's going on in the real estate market and how to navigate it.
Here's how to understand buying and selling power in today's market as we head into 2023.
SELLERS HOLD FIRM ON HIGHER HOME PRICES
Sellers are currently trying to decide if they 'really' need to move. The frenzy that was the last two years of record-high home prices is cooling as the market stabilizes. The price of single-family homes will continue to appreciate, however.
The good news: we are seeing an increase in inventory and fewer situations of bidding wars with massive over-asking bids.
BUYERS ARE PUTTING THEIR FOOT DOWN
Because buyers now have more options, they have the leverage to be pickier. Depending on the property, financial situation, etc, for a lot of buyers this can mean a few things:
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More room for negotiation
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If you have cash, you can come in at a lower offer
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Less money out of pocket
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Less waiving of appraisals, contingencies, etc
THE TALK OF INTEREST RATES
Yes, interest rates are higher BUT there are ways to save money. This goes back to there being room for negotiation with things you can ask for in the purchasing process such as seller credits. (Scroll down for more information regarding interest rates).
WHAT PURCHASING IN THIS HOUSING MARKET MEANS FOR FUTURE RESELL
Everyone’s question: even if I buy in this housing market knowing prices are inflated, what does this mean for reselling? Your equity will continue to build – real estate of the top wealth builder out there. In our opinion, if short-selling is a concern, you shouldn’t worry because home values are continuing to increase.
HOW DOES THIS INFORMATION APPLY SPECIFICALLY TO YOU AND THE SOUTH FLORIDA HOUSING MARKET?
The supply/demand imbalance will continue in South Florida. With three major, booming cities (Fort Lauderdale, West Palm, and Miami) there will be no shortage of economical drivers in business and entertainment and the desire to live here will remain high.
As a buyer in 2023, you definitely have more leverage than you did at the beginning of 2022. We think that the younger generations who are entering the purchasing world will have a chance as inventory starts to increase.
THE AGE-OLD QUESTION: WHAT ABOUT INTEREST RATES?
At this time, mortgage rates are continuing to rise and that will impact the bottom lines of homeowners and borrowers. For current mortgage rate information, please visit this
article.
HERE’S HOW INTEREST RATES CURRENTLY AFFECT WHAT YOU’RE PAYING
Higher rates are going to mean higher monthly mortgage payments.
WHICH MEANS YOUR BUYING POWER IS
Likely less attainable than earlier this year if you’re looking to go for a larger mortgage.
For every half-percent rise in interest rates, a homebuyer’s buying power drops by about 5%. If a borrower was pre-approved for a $350,000 property and the interest rate went up by a half-percent, a buyer now can expect the buying power to drop by $17,500. That pre-approval will drop to $332,500 [
source: Carly Wimer].
AND HERE IS HOW THAT TRANSLATES
If you’re eager to buy a home, buckle down on your finances. Have a very clear picture of what you can afford and start having conversations with lenders, potentially seeking out a pre-approval letter.
Our broker and seasoned real estate advisor Don Ginsburg say, "Interest rates rising will impact first-time homebuyers and first move-up buyers the most. It will also have a cooling effect on the overall residential sales market as well.”
SO SHOULD YOU BUY, SELL OR WAIT?
View your home as a home first and an investment second. You should do what’s best for you and your needs. When you’re ready to have a conversation, we’re here.
Look to Freebird as your trusted real estate brokerage to navigate the housing market no matter if you’re looking to buy, sell rent or invest.
When we say we’re different, we mean it. We go beyond the standard practice and know how to use clever, yet ethical and effective, ways to achieve your desired outcome. We’re not afraid to get scrappy and creative in order to do so.
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