Changes are officially coming. The interest rate went from 3% to 5.5% in just a short 4 months. Available inventory is increasing, the number of sales is dropping, and marketing time is extending. Market is moving away from a seller’s market. That certainly was not the type of market that we have been used to in the last two years. Did you recall we were seeing this trend a few years back. What happened back then? How is it different this time? Let’s find out in this video.
Changes are officially coming. The interest rate went from 3% to 5.5% in just a short 4 months. Available inventory is increasing, the number of sales is dropping, and marketing time is extending. Market is moving away from a seller’s market. That certainly was not the type of market that we have been used to in the last two years. Did you recall we were seeing this trend a few years back. What happened back then? How is it different this time? Let’s find out in this video. The changes in the market we are seeing now is not something new. We saw very similar trends in back in 2018. Interest rate increased went from low 3’s to close to 5%. As a result, pending sales dropped, inventory startied to stack up, and marketing time started to extend. Sounds similar? Back in 2019, Interest rate dropped back down, then COVID hit, interest rate fall further and the rest was history. Fast forward to 2022, We probably will not see that adjustment in interest rate this time around. After talking to a few lenders, the concenaua is that the interst rate will get as high as 7-8% by end of the year. that means the market will continue to soften. Why does the interest rate has such a powerful impact on buyer’s activities? Why am I so confident if the interest rate continue to goes up…market will soften further? To put things in perspective…. If a buyer is putting down 20% on a 1 million dollar home. The monthly payment at 3% was $3350 a month. At today’s rate of 5.5%, the payment is $4500 a month. Now, if the interest gets to 7% , the payment become $5300 – that will be almost $24,000 difference a year. Can you see how thats going to price some buyers out of the market? So that will translate in to less active buyers on the market, less showing on listings, and less offer received per listing. Even for buyers that are active on the market and highly qualified, they purchase power also is now lowered significantly. There is no doubt with these trends continue, we are going to see the market shift form a hot sellers market towards a more balanced market. So for seller, pricing your property correctly is more crucial than ever. Gone are the the days where anything will sell. Buyer is cost is increasing and they become more selective. For buyer, still be prepared for multiple offers on listings but if the property is not in a desirable location or condition, you can expect to see a lot less competitions.
