Historically, there is a general relationship between mortgage rates and the demand for houses, which can, in turn, influence housing prices. In 2023 there have been changes in the dynamics of the single-family housing market that have led to different trends.
What are some of the problems with low inventory?
- The supply of available homes for sale has not kept up with the demand from potential buyers. In a low inventory market, it is common for multiple buyers to make offers on a single property, resulting in higher home prices.
- A seller’s market, where sellers have the upper hand in negotiations, and may be less inclined to make concessions to buyers.
- Higher mortgage rates.
- Pressure on first-time buyers to bid above their budget can lead to financial stress.
- The increase in the supply of new single-family homes has failed to keep pace with household formation and homes lost due to demolition, natural disasters, or conversions to other uses.
- The supply of existing homes for sale has been chronically tight for years. Homeowners have opted not to resell their homes for a variety of reasons, including a lack of affordable trade-up options in the new home market.
- Older homeowners are choosing to age in place.
- Following the rapid spike in mortgage rates that started in 2022, millions of households are out of the home buying market.
- The lingering COVID-19 pandemic has influenced housing trends including remote work.
What about your community, your neighborhood, your home?
Remember that the local real estate market and the condition of your specific property will also influence your selling strategy. Working with a local real estate agent who has experience in your area can be invaluable for understanding the market dynamics and achieving the highest offer for your single-family home.
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