The U.S. housing market has been in a slump, but there are signs that it might be turning around. Let’s break down what’s happening in simple terms.
Current Challenges
• High mortgage rates: The average interest rate for a 30-year mortgage is around 6.77%. This is much higher compared to the rates below 3% in 2020-21, making borrowing more expensive.
• Housing shortage: There’s a shortage of 3.8 million homes due to a lack of new construction post-2008 financial crisis.
• Seller’s market: Despite high mortgage rates, sellers have had the upper hand because of limited supply and high demand.
Positive Signs
• Increase in sellers: More sellers are entering the market. In the past two years, 500,000 more sellers have decided to list their homes.
• New home construction: Last year, new-home construction outpaced household formations for the first time since 2016.
• Price adjustments: Although prices are still high, the rate of price increases has slowed down. More sellers are reducing their asking prices.
What Could Change?
1. Potential for a buyer’s market – If the supply of homes continues to increase and mortgage rates drop, buyers may regain some negotiating power.
2. Interest rate cuts – Forecasts suggest that interest rates might be reduced next year, possibly lowering mortgage rates and encouraging more buyers.
The road to recovery may be long, but these signs indicate that changes are underway. Keep an eye on market trends, especially if you’re planning to buy or sell a home soon.
If you’re considering buying or selling a home, whether you’re an investor, a first-time buyer, or looking to upgrade, I, Shirin Rezania Ramos, a CA licensed real estate broker with 19 years of experience, am here to assist you in exploring this evolving market. Let’s work together to achieve your real estate goals!
Source: Quartz
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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379
