Rising mortgage rates, low seller inventory and persistently high home prices have slowed the residential real estate industry and investment strategies.
As the average national mortgage rate approaches 7.5%, many are questioning the logic behind it. housing investment for the near future. Benzinga spoke with the general manager (GM) of a growing brokerage firm that now serves seven states nationwide.
Dave Speers is the general manager of a Philadelphia-based brokerage firm. Hauserclaims to be a modern and socially responsible real estate and mortgage brokerage company. A graduate of Pennsylvania State University, Spears was Hauser’s first employee, serving as sales director and his GM in Philadelphia before assuming his current role. Benzinga asked him to share his thoughts on this increasingly volatile residential real estate market.
Benzinga: Is the current residential real estate market a one-size-fits-all scenario across the country?
speaker: No, it’s actually worse in some areas. The Northeast stock is particularly depleted, but more homes are on the market in the Southeast, like Florida.
Benzinga: Any advice for residential real estate investors?
speaker: Stay on your toes and look for opportunities. Winter is coming and it will be brutal for the housing market. What lies ahead of us will make the (pandemic) lockdowns look like their glory days compared to what will happen in the coming months. regional pioneer, reporting a 30% year-to-date decline in sales. December, January and February are the worst months and investors should look for investment opportunities during those months. Investors should be patient and not be afraid to undervalue the offer. Short-term rentals are also good investment opportunities.
Benzinga: Is it because of interest rates that sales and inventories are currently down in some regions?
speaker: Simply put, if interest rates stay at this level, people who need to move will have to lower their prices and move out. Rent prices are now high, some even outpacing inflation, putting homeowners looking to move out at a disadvantage.
But in any market there will always be a percentage of the population that needs to be sold, so there will always be inventory. At the current rate, if interest rates drop to around the 5% level, we may be able to endure it and lead to an increase in sales. Demand from buyers for housing has increased so much after the pandemic that people will want to buy and sell as long as things calm down a bit.
Benzinga: Cash was king during the low inventory wars and bidding wars last year and the first quarter of this year. Those who bid higher on their homes than others usually had cash on hand to do so. Do you still do?
speaker: Yes, cash buyers are also more savvy when it comes to making decisions. But with a recession looming, they’ve broken through the hatches and are looking only for theft.
They are also quick to jump on opportunities when prices or interest rates drop. There is now a conflict between homeowners and buyers. Because interest rates are going up, but prices aren’t actually going down. people are stuck. Prices are still at all-time highs and the market is fixated on price cuts.
Benzinga: How does it differ from the Great Recession of 2008 that many believe a recession is inevitable?
speaker: The difference now is that the Fed (Federal Reserve Board) has made this a controlled and intentional crash. Unfortunately, it will be the housing industry that will feel the pain first. I hope this is just a matter of him 6 to 9 months.
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Dave Speers photo courtesy of Houwzer
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