We are all accustomed to hearing how the present market is one of the most competitive in recent history for home sellers. But it’s crucial to keep in mind that, like any other market for commodities, the real estate market experiences ups and downs. Let’s examine how the changing market is affecting home sellers in Pasadena to better understand how home prices may be impacted in the near future.
Supply and Demand
Out of all of the factors that are impacting housing prices, supply and demand seem to remain the largest contributor.
Throughout the global pandemic, we have seen both supply and demand ping pong back and forth, but supply has almost always stayed well below demand. This imbalance has buoyed prices during the entire pandemic alongside sending some property values skyrocketing.
The number of homes that are now on the market has slowly increased over time, but they tend to be snapped up by the enormous pool of purchasers, some of whom have patiently waited years for a suitable home to become available. Demand is slowly declining, but it will take some time before it reaches a level that will force price reductions as well.
Shifting Interest Rates
Something that has assisted in putting the brakes on the seemingly unending stream of buyers (and contributing to the changing market) has been increasing interest rates.
The Federal Reserve has recently increased interest rates three times, and they are presently working to prevent any additional hikes. Rising interest rates cause mortgage lenders to tighten their guidelines, which has a detrimental impact on the buyer pool. Fewer people are financially able to effectively buy a home as it becomes harder to get approved for a mortgage.
The quickest and most straightforward way to understand this is that rising interest rates immediately have a cooling effect on the overall real estate market. The remaining buyers are still motivated despite losing some potential customers.
Cost of Living
Besides loan interest rates and qualifications both increasing by quite a bit, the everyday cost of living has also gone up, which is adding to the changing market conditions.
It’s no secret that prices for goods like food, petrol, and utilities are rising, as well as for all the other small costs that soon mount up. An increase in the cost of living will compel some purchasers to fully reconsider their capacity for acquiring a property, unlike increasing interest rates, which will lower the number of buyers since lenders are being more cautious in their lending.
At the very least, increasing living costs will cause buyers to scale back their home-buying aspirations and force them to return to the listings to re-enter the market and face the shifting conditions in Pasadena.
Be Prepared for Aggressive Buyers
Of the buyers that are able to stick around and continue their search unimpeded, they will enter into negotiations ready to make a quick deal.
The buyers that have been around for a while are accustomed to bidding battles and will be prepared and eager to sweeten their offer to woo you. These purchasers have dealt with one of the generation’s most fiercely competitive and unforgiving housing markets.
To complicate things for buyers even further, internet wholesalers and local investors have been making a mint by swooping in to pick up a property quickly and flip it as quickly as possible.
Your Professional Guide Through a Changing Market in Pasadena
The current unstable economic climate is frightening many consumers and home sellers. Avoid letting the fluctuating market conditions win! Contact us right now at (713) 766-0442 if you need assistance navigating Pasadena shifting market.