Buyers may need to lower prices as mortgage rates squeeze
Federal Reserve raises key interest rates again
The Federal Reserve has raised its key interest rate by three-quarters of a percentage point for the third consecutive term, and has signaled that even more hikes are on the way. This is an aggressive pace that increases the risk of eventual recession. (September 21st)
- The peak may have passed, but prices are still 37% higher than in 2020
- Low supply means it’s still a seller’s market
Homebuyers usually get real estate attention on news about mortgage rates and low supply, but the market is changing for sellers, and realtors say they have some advice for those wanting to lister.
Rising mortgage rates are putting pressure on the budgets of would-be buyers who are ignoring overpriced homes and waiting for prices to drop, according to multiple real estate agents.
Many sellers want their homes priced at half the current rate, like they did earlier this year.
Sotheby’s International real estate agent Robert Rattley said: “People hire us as advisors to sell their biggest assets, their homes, and they often don’t want to listen to our advice.” , I ask people, ‘What is the expected price?
Early 2022 and 2021 as a whole are unusual times for the real estate market, with growth still there, but much less than before. “Wishful pricing” worked when mortgage rates were half what they are today, but it doesn’t work now.
“I always say that unless you’re within 10% of the actual price, you won’t get an offer and people will wait for the price to drop,” says Rutley.
See our properties: RI’s housing market is still hot, but is it starting to cool off?
premier real estate Broker and owner Chris Whitten said sellers often see comparable homes sold for $500,000 in the spring and try to list for $530,000 without getting an offer.
“We try to keep the sellers at bay and yes, we sold that much, but this is a different market,” Whitten said.
Before the pandemic, everyone was “playing the cold game,” Witten said. The price of the house made him $20,000 more than its actual perceived value, the buyer matched him with $15,000 less, the seller he walked away with $5,000 extra, and both the buyer and the seller felt like they won. rice field.
“No longer,” Witten said. “You have to set the price you need to find a fair market value, and that price pushes you a little.”
Realtor Constance Stowers She tries to tell her clients where to price their homes, but some stick to higher pricing.
“They say, ‘This is what my house is worth,’ but at the end of the day, it’s worth it for someone to pay for it,” she said.
“Make your home perfect”
Mortgage rates were low, bidding wars were commonplace, buyers were consistently exempt from inspections, and home prices were rising by double digits every month. It was an “extreme” seller’s market, Ratley said.
Now that the market has cooled, it’s still a seller’s market, but sellers need to do more to ensure that their homes sell.
“We need to make the house perfect,” Ratley said. “People are buying ready-to-use homes that are priced right.”
Whitten said sellers should have professional photos taken and floor plans available.
“You need to market the property,” Witten said. “You just have [fewer] Buyers are in the pool, so you need to make your home more attractive. “
“Sell it fast”
Stowers said the market may have passed its peak, but prices have risen 37% over the past two years. With mortgage rates doubling since his January and supply sluggish, it’s still a great time to sell.
“Sell it as soon as possible,” Stowers said. “Please put it on the market.”
Witten says now is the perfect time for people worried about where they might move if they sell their home. In 2021 and he’s in 2020, anyone looking to buy a home in preparation for the contingency that the house they currently live in needs to be sold has gone to the bottom of the pile of offers.
There are fewer offers as the market calms down, and those offers are being accepted.
Bridge loan available
One of the big concerns for sellers is where to move after selling their home. Many buyers are happy to embrace emergency clauses that allow sellers to line up their next home before they move out, a trend that began in 2021.
For some sellers looking to buy a larger home or in a more expensive neighborhood, a bridge loan could be an effective way to get into a new home, Stowers said.
A bridge loan is offered as a short-term solution to “bridge” the gap between buying a new home and selling an old one. According to the JPMorgan Chase website.
This gives the seller access to equity in the home to secure the purchase of the new home without the cash from the sale of the old home.
“They brought some of my clients out of sticky situations,” Stowers said.