Less Homes are Selling for Over Asking
In the last couple of weeks, less homes are selling for over asking and more homes have price reductions. Home sales are beginning to slow down from a burning hot market. As the real estate market stabilizes, we may see a slight decrease in home prices to accommodate higher mortgage rates.
Our Area is Still in Demand
Sacramento and the surrounding areas remain desirable locations and the local market is still warm due to low supply. Properties may receive less offers than a few months ago, but demand is still above the supply of available homes.
Higher Interest Rates May Stick Around
As interest rates go higher, I do not foresee home values dropping much. My best guess is that interest rates in the 6% to 7% range may become the new normal.
Still Ready to Buy? If the shoe fits, buy it!
Paying rent is just throwing money away. If you have stable employment and already saved a downpayment, homeownership may be the right next step for you. Even if housing values go through a correction, real estate values historically recover fairly fast.
My first home loan in 1981 had a 16% mortgage rate! Our mortgage payment initially was 3x higher than our rent. Over time, you do adjust, make your home your own and accrue equity.
Not Quite Ready Yet? Do This Instead…
The first-time home buyer has got to be patient. For those buyers who don’t want to take the plunge into homeownership right now use this time to prepare financially. My suggestion is to keep saving, saving, saving! Make sure you have a solid budget and watch your expenditures.
A Price Correction Will Come
At some point the market will slow down and values will come down. However, when values start coming back down, that’s going to potentially fuel demand. Investors may an opportunity to snatch up more properties. The first time home buyer will continue to have an uphill challenge. Having a financially strong position will be your best defense.
David Banks, Senior Mortgage Lender
Serving Northern California
Call or Text: 916-628-1864
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