And, in the Blink of an Eye…
In the past year, we’ve experienced an almost unprecedented real estate market. It’s been a real scorcher! If you were a seller, you likely had a gold mine on your hands with more offers than you could count, each one better than the previous with no appraisal contingencies, no inspections, cash, and well over your asking price. If you were a buyer, finding a house probably felt more like a street fight than a treasure hunt. The offers made no sense, the appraisals were all over the place, and you had to forgo inspections and find extra cash—just to remain in the game! This time last year, a reported 67% of all home offers faced a bidding war. You probably experienced more than your share of loss.
Now, the sizzle of our once steaming-hot market is starting to cool down. It’s beginning to normalize and “shift” to something a little more recognizable.
So, what exactly is the “shift?”
For the first time in many months, the MLS inventory of available homes is growing. This provides buyers with more choice, and an opportunity to browse as homes stay on the market for longer periods of time. Bidding wars are also experiencing a chill, and though multiple offers in one day had become common, that statistic is starting to come down as well. Sellers are taking note and are starting to drop their prices to attract buyers quickly. Even builder’s homes are once again opening, which to seasoned real estate agents is a strong indicator of what’s to come.
Buyers shouldn’t celebrate just yet! The “shift” also means a change to qualification and affordability. Those who could easily qualify for loans at 3% now have to shop at an entirely different price point. For example, a buyer who could afford a $400,000 mortgage at 3% (principal and interest payment $1686.) is now looking at 6% and a principal and interest payment of $2400. However, buyers should also keep this old adage in mind, “Marry the home, not the mortgage.” If you can manage to purchase the home you want, there may be a good refinance option available to you in the future.
What does this mean for Florida?
Florida is still an in-demand market and, if projections hold true, may be one of the last areas to experience a major shift. That said, those rumored briefcases full of cash will become more of a rarity. As things begin to slow down in other parts of the country, we assume we will see fewer and fewer cash buyers, making appraisals once again an important part of the transaction. Higher interest rates will inevitably impact the buyers pool and sellers will need to adjust expectations.
If you’re thinking of selling your home in the near future, now is a great time to speak to an experienced agent and get their take on the market conditions, what your property is likely to yield, and find out how they can help you maximize the return on your investment.
Happy Fourth of July Everyone! Celebrating our wonderful country and our freedoms!