By Erica Thomas, News of 1819
The housing market is changing rapidly and Alabama realtors are seeing a difference.
Inflation is raging at its highest level in over 40 years and the economy has contracted for two straight quarters. In June, consumer prices rose 9.1% from a year earlier, the largest increase since 1981. In addition, rising interest rates and changes in home values are pushing potential buyers and sellers wondering what to do. But there is good news and bad news for both.
For someone selling a home, Jonny Cates, COO and co-owner of Sold South Realty, said things are starting to get a little more competitive.
“The market has definitely started to relax,” Cates said. “Right now the biggest problem is that inventory is starting to pile up.”
Sellers who didn’t put their homes on the market during the 2020 and 2021 boom may have been hesitant because they didn’t know where they would go.
“Now that the market is starting to correct, we’re seeing more and more sellers who still want to catch the wave and not miss out on all the equity they have in their home,” Cates said.
The higher inventory could mean home prices could drop, but Cates said sellers still have time to make money on their investments.
As for the buyer, the process may be simpler than it was this time last year. Instead of rushing into a house because you’re worried it’ll sell, you can shop around a bit to find exactly what you want.
“Now it’s a lot nicer because shoppers can take their time,” Cates said. “They can see multiple homes and that becomes the fun part of real estate…We want our customers to be happy with what they’re buying and we don’t want them to pay too much.”
On the other hand, Cates said buyers don’t have as much buying power because interest rates have risen.
“We’re adding inventory, but with the rate going up, we’re decreasing the pool of buyers or the number of people who can actually afford those homes,” he explained.
Interest rates are still historically low and there are options. People only stay in their homes for three or four years now, whereas in the past people bought a house for life. Due to work and lifestyle changes, statistically people just don’t want to stay long.
If that’s you, Cates said you might not want a fixed rate mortgage.
“There are a lot of people turning to adjustable rate mortgages.”
Cates said the 2009 stock market crash scared people off adjustable mortgages. However, since then he said changes have been made to keep owners safe.
“Now they can take them where they’ll never go within two points of where you started,” Cates said.
The good news is that if you’ve been waiting to buy, you’ll probably be better off in the long run.
“In my opinion, home values are overvalued by about 20%,” Cates said. “Once this is fixed, there will be people who will not be happy because they paid too much.”
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