Lately, I’ve been getting asked a lot about why the real estate market feels like a pressure cooker situation. Why are we witnessing high levels of sales activity intensity for each new listing coming on the market? Here is a quick general update on what is really happening.
We have returned to an extremely intense market for each new listing due to extremely strong job growth and eager buyers who want to purchase before interest rates go higher. 30-year mortgage interest rates have increased .5% since the beginning of the year which impacts home affordability and pushes some buyers out of market places. While $100 a month might not sound like too much, it might adjust a client’s debt- to-loan ratio, which could push the size of a house they can afford down by $40,000 or $50,000.
Tag this along with a low 1.2 month supply of inventory and we come to the basic economic law of “supply and demand.”
There has also been a lot of chatter about a looming real estate bubble. The designated broker at Bentley Properties, George Moorhead says, “a healthy market has corrections and booms with a mix of flattening cycles.” Which is exactly what we have been experiencing in the past few years on a seasonal basis.Markets without these healthy cycles have catastrophic events much like we experienced in 2007 to 2011.
The market continues to trend hot with no apparent end in sight.