MINT HILL, NC – Yes, interest rates are up, and finding a house you can afford, if you’re lucky enough to be a buyer in today’s market, might seem impossible. However, there are other issues that are causing housing discussions to be so difficult today, too.
Sometimes, an article comes out that pushes incorrect information using sources from the past that don’t reflect the way the real estate market is today. It might seem cleaver or even plausible that building more houses is the solution to all the woes in the real estate market, but it’s not.
Sure, people were lining up for a home for sale in Mint Hill or any other market back earlier in 2022. While that might not seem that long ago, the days of real estate agents acting as bouncers are gone and it’s not because there is a shortage of houses.
Citing a study from 2019 that shows housing prices tend to go down when new homes are built seems to add credibility to an article from The Atlantic, but this can also be misleading. Yes, more supply causes home prices to drop, but the premise of the article is a shortage of houses which is to blame for the housing issues in the United States.
There might be a small bit of truth in that, but it’s nowhere near the entire truth. Builders are discounting prices drastically to find interested buyers. When this happens, many buyers don’t build. Why would they, if they can’t find buyers for the homes they have already built?
What’s Really Causing Market Woes
It’s not the lack of new homes that is causing market woes, as some self-proclaimed experts might think. It’s a variety of factors that are impacting both existing home sales and the building of new homes.
First, interest rate hikes have caused mortgage rates to go up. Everybody talks about how this impacts affordability for buyers, which it does, but very few talk about the potential sellers that have backed off to hold on to their very low mortgage rate.
Sellers often have to become buyers, too. This means listing their home for sale will lead to a mortgage interest rate hike that they don’t want.
Second, buyers are afraid of catching a falling knife. Right now, prices on homes have slowed down and, in some areas, even started to drop. Many predict 2023 to be a year where housing loses quite a bit of value. Buyers don’t want to buy a property only to watch it lose 20% or more of its value in the first year.
Finally, the overall economy has caused many buyers to stay where they are. As food, gas, and other items have become more expensive this year, it’s hard for potential buyers to be willing to make a change. Layoffs are starting to become more common across the country too, which has many people scared.
So, while there might be truth to building more homes is the answer to the market woes when buyers are lining up for homes, it’s not the answer now. Why would a home builder invest in creating new homes when they cannot sell the homes they already have? This isn’t a simple supply and demand problem. It has many layers and using sources from 2021 to make a point about the housing market today is rather irresponsible, as the market has changed drastically over the past six months.
I would love to be part of your journey when the time is right for you. If you ever have a real estate question or need, or know someone who does, trust that you can turn to me. I will help you make the right move! Anna Granger (704) 650-5707 | firstname.lastname@example.org | www.1stchoicepropertiesinc.com