Is it a good time to buy real estate?
As our friend and real estate attorney Bill Bronchick says, “I’ll give you the lawyer answer–it depends.” The right investment decisions depend on things like your financial situation, short-term goals, and long-term strategy. However, we can tell you this—there are signs of a softening market, which means home prices are decreasing and inventory is increasing.
Why? A major reason is financing. Since March of 2022, the Fed has raised interest rates 3.75 basis points to combat inflation, the largest hike in decades. This increases monthly payments on conventional mortgages significantly, which prices many homebuyers out of the market.
Check out this episode of The WealthBuilders Podcast to learn how you can position your portfolio for growth in 2023. Karen Conrad provides several questions to help you identify signs of a softening market, including but not limited to:
– What is the average number of days properties are on the market?
- The longer, the better, as it gives you more negotiating power
– How many months’ supply of houses are on the market?
- In other words, how many months would it give take for the current inventory of houses to sell given the current sales’ pace? You can google this for any market.
- As the number of month’s supply rises, the market shifts from a seller’s market to a buyer’s market. Many markets are hitting the three- month marker, and some are even hovering around six months.
She also discusses an increase in home construction and vacation property demand. Do you want to get up-to-date on what’s happening in the world of real estate? If so, click here to listen to the corresponding episode of The WealthBuilders Podcast.