July Newsletter

The real estate market is not like most markets where we show up and we can generally get what we want without competition from other consumers.  To get a house that you want to purchase you’re competing with other buyers (especially in this market), and the best offer for the seller gets taken.   Competition is the key word here.  Most of you that know me well, know that I have a competitive side that I exercise with tennis, golf, chess, a game of cards or racing down the ski slopes.  Let me digress before I come back to the point I’m trying to make. 

The biggest factor that is affecting the housing market is affordability.  It’s what keeping homeowners with a 4% or below mortgage rate staying put or it’s buyers who can’t afford to purchase the type of home they want with the high interest rates.   Its why existing homes sales are at about 50% from where they were in 2019 when were more in a typical housing market.   There’s no sugar coating that the market is a bit stagnant with the current conditions of low inventory, but enough buyers not effected by rates to keep the prices stable in the metro area. 

There’s a term in engineering that we use, it’s called back solving.  It’s what it sounds like, solving an equation backwards with a different given variable(s) or a different starting point.  So, let’s back solve the market so it works for you! 

Why?  Now this is where I get back to my original point of competition.  It feels like we’re close to the peak or reached the top of the Fed rate hikes.  After these rapid rate hikes, you’ll see the Fed drops the rates rapidly (see graph below).  The steeper the rate hikes, the steeper the drops.  I mentioned a few newsletters back that 71% of prospective buyers are waiting for an interest rate of 5.5%.  So, here's the competition aspect of the market, and whether you want to compete with that volume of a buyers in the market.   My fear is that we have a repeat of the summer of 2020 to the summer of 2022 when this log jam breaks open.  Where there was a huge surge in prices because of the competition, and most buyers had to go above asking, waive inspections and offer “as is” to get an offer accepted. 

Decades ago, I was an Eagle Scout, and the Scouts motto is “Be Prepared” which is a great motto for life.  I didn’t get in this business to be a salesman, I moved over to Real Estate from structural engineering to use my background, knowledge, and skill set to help people.   

If you’re thinking that you’d like a move in the next year or so, let’s have a conversation and get you prepared to navigate the market with less competition when the market hits the conditions that favor you.   I’m here to help, and you’re not wasting my time.  If you’re a skier you know that you need to prepare your gear ahead of time, watch the weather, and go when it’s a powder day!

The only people that benefit from a crazy housing market are sellers that are moving out of state or are going to sit out for a couple of years. 

Recent Home tip is about damage caused to foundations from a leaky spigot in the summer months.  Check it out on my website.  www.nathanaustinrealtor.com