I get asked the same sort of real estate question pretty often:
“What do you think will happen with real estate?”
“Are we in a real estate bubble?”
“Will it get easier to buy a house in the future?”
“Will prices come down?”
There are big things are driving the market:
Mortgage rates are up and will continue as the Fed raises rates to get control of inflation.
Inventory is still low. This is measured in months, the longer houses stay on the market, the more houses available. Six months of inventory is a “balanced” market. The Orlando area has a one-month inventory, a historic low.
Prices are high. The median price of a home in the Orlando area was $370,000 in April 2022, up 2.55% from March 2022, another historic change.
Orlando is the 2nd fastest growing city of the 30 largest cities in the country. We attract as many as 1000 new residents every week!
I wish I had a crystal ball to make some accurate predictions about what might happen in the next year, but I mostly wish I could give some positive news to buyers struggling to purchase. One thing we can say for certain is the market will continue to be tight and there will continue to be competition for available houses.
Because of the lack of inventory and high demand, there isn’t a bubble that will suddenly pop, sending home prices crashing.
But for buyers there are possible glimmers of change:
Some experts are starting to feel that some markets will have price reductions between 5-15%.
I have noticed homes with “Price Reduction” more often in the last month. Of course, it’s still a great time to sell. And if indeed, prices will soften some in the near future, now would be the time to sell.
Available homes, interest rates, wages, and inflation are all part of a big soup that drives a buyer’s ability to purchase a home.
As homes get harder to purchase due to interest rates and inflation, some buyers will drop out of the market, easing up on the competition. Hopefully, there will be fewer qualified buyers for the available homes.
Baby Boomers will continue to make lifestyle changes which often include selling the family home.
I had buyers who closed two weeks ago on a starter home being sold by buyers who were downsizing.
If you’re waiting on the side-line to buy, it’s a great opportunity to save more cash. Cash is king in this market, and a 20% downpayment will save you monthly mortgage insurance. Buying still remains a better option than renting long term, especially in light of large rent price increases.
