Are you
wondering what’s really going on in today’s real estate market? In this video,
I’m going to explain what’s happening in Shasta and Orange County’s real estate
market and how current events are impacting it. We’ll also consider some common
fears people have about the market so you know exactly what to expect in the
coming months.
Rising
Rates
In our
current real estate market, there’s always one or two elephants hiding out in
the room. However, right now we seem to have several. The first one that we all
notice going on is that rates are going up.
This is right
in front of our faces, and we hear about it all the time. Rates are currently
in the high 4% range, though they will possibly reach into the low 5% range for
some people depending on the program. We've watched the rate jump from the high
2s range—which is unbelievable—into the 3s, then crawl up and sneak right into
the 4s.
While we
expected this to happen, it's happened a little bit quicker than we had hoped.
Overall,
throughout history, these are still extremely low rates. So if you've been
looking for a home over the last few months, understand that rates and your pre-approvals
may have changed. You’ll need to go back, take a look, and speak with your
lender to make sure that your rate still offers you the same opportunity to
purchase a home at the price that you were looking at.
Will The
Market Crash?
We also know
that we do not have a crystal ball; we do not know if rates are going to
continue to increase to 5%, 6%, or 7%. What we do know is that people
are coming to us and stating that they are waiting to purchase a home until the
market crashes. I've been hearing this for the last several years.
Going back
two to four years ago as prices were inching up, they kept going faster and
faster and increasing. Buyers were telling me the same thing; they were going
to wait until the market crashed and then make a purchase. At that time, home prices
were $100,000 to $150,000 less than they are now.
That means
those same buyers got priced out of the market. They may no longer be able to get
a home that they feel fits their needs, especially when comparing today's homes
to what they were looking at then. They can't get the same thing. Remember this
anytime that you are expecting the market to crash.
Supply And
Demand
While we can’t
know the future or if that is going to happen, what we do currently have is the
ability to look at our supply and demand. Market prices are set by inventory
supply and buyers’ demand; if we're looking at the fact that our inventory is
extremely low and our buyer demand is extremely high, this impacts our pricing.
Because of
this, we are still seeing prices continue to rise even though we have increasing
interest rates and some difficulties in the economy. The other factor is that so
many people are making decisions on what they feel that the market will be like
in two years, five years, six months, or even tomorrow. However, they're not
looking at the personal factors of why they're purchasing a home.
If you know
you're going to be in the same home for the next five, seven, or ten years, you're
making a personal decision based on your needs and wants for you, your family,
your business, or your fun. The decision to buy is beyond just the pricing, as
long as it's reasonable and the payment is affordable to you.
Looking
Ahead
When thinking
about whether a housing payment will be affordable, you also have to look ahead
to the future. Is the payment going to be affordable to you if there are any
adjustments in your income? If the market dips, will you be okay until it comes
back up? If the market appreciates, will you take advantage of this factor and
sell the home?
If you are
going to spend the next several years in the same home, you are really looking
at how the payment impacts you more than you're looking at the overall pricing.
Just remember, it's not always about the market value; it's about your
situation and what is going to work best for you long term.
The other
thing to consider is that rents are high; we have seen so many increases in
rents. It's important to look at what you're gaining by owning a home and what
you're gaining by renting a home over time. Real estate has always appreciated
in value, so if you are going to be there for a significant amount of time, the
odds are that it's going to appreciate. And if you own a home, there are things
that you can also do to increase the value.
Should You
Buy?
When deciding
whether you should buy a home, the important thing is to really look at your
personal situation, both in the short term and the long term. Figure out for
yourself if it's a good time to purchase a home and how much the pricing
impacts you, especially if it fluctuates a little bit.
Additionally,
we all know what is going on with gas prices, economic changes, and people
moving to different areas. When you're making your decision, definitely look at
these items. If the gas prices continue to go up or if the gas prices stay
where they are for a lengthy amount of time, are you able to afford to purchase
a home? Is it a smart decision for you?
I always tell
people it's not about what you can qualify for; it's about what you can truly
afford. So remember, when you're making the decision, don't max yourself out. Instead,
purchase a home that's going to fit your needs and be financially comfortable
for you in the long term.
I’m Here To
Help
I hope this
gave you a good idea of what’s currently going on in the real estate market. If
you're thinking of buying or selling a home in Shasta County or Orange County,
I am extremely happy to help you reach your real estate goals. Feel free to
reach out to me and I’ll be happy to connect.
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estate. Stay tuned to see what I feature next!