still the best investment

The good times of low interest rates, a booming economy, escalating home prices and overall euphoria have passed.

With inflation and interest rates on the rise, some buyers have been pushed to the sidelines. Sellers are worried they have missed the top of the market and are still fretting over the question, “Where would I go?” And everyone is worried about inflation and high mortgage rates.

But do not panic.

The real estate market is driven by supply and demand, and the following considerations:

1. Interest rates are actually nearing normal levels. Before the pandemic, interest rates were about 3.75%. During the pandemic, they were artificially pushed down to between 2.5 and 2.9% because of all the stimulus money. They are normalizing in the 5% range but mortgages can still be had in the mid 4% range.

2. Inventory levels continue to hover at historical lows due to lack of construction.

3. The number of buyers continues to exceed the number of homes for sale. Most people who lost out on homes due to bidding wars are still actively in the market.

4. While the number of transactions has decreased on a year over year basis, prices continue to hold.

5. Historically, home ownership has and continues to be the best hedge against inflation.

Some normalcy has returned to the housing market. The number of transactions will decrease due to higher mortgage rates, with some buyers being pushed to the sidelines. Prices will trend higher modestly because of the escalating cost to rent—making home ownership the better option.

There is never a bad time to enter the housing market and own a home. And itcontinues to be an opportunistic time for owners to sell. This is not a bubble and we do not anticipate any sort of crash. So seize the moment and review your options with an experienced realtor.

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