07/15/2024 | Press release | Archived content
The current housing market is still working to the seller's advantage, as persistently low inventory sustains rising prices and a competitive offer environment. The Case-Shiller Index reported a 6.4% increase in home prices in February compared to the previous year, with an 8% increase among the country's top 20 metro areas.
"For a lot of buyers - and sellers who will need to buy - succeeding in this market comes down to knowing all of the products and solutions available and finding the right fit," says Johnathan Graves, regional sales manager with Northwest Bank in Buffalo, New York. "Preparing in advance can give buyers an edge in a competitive market."
Record-low inventory is creating a challenging market for home buyers, says Jay Herlan, CEO and owner of The Empire Team at Keller Williams Lancaster Realty in Buffalo. "We're seeing multiple offer situations on almost every house," he adds. High rents are spurring people to purchase homes as they consider transforming their monthly rental payment into a mortgage.
However, Graves adds that homeowners have been less motivated to sell, given that many refinanced during the pandemic when interest rates were at an all-time low. "It becomes difficult for people to leave their homes," Graves says. "They're worried that if they leave their house, they may be unable to find or buy a new one."
The result is fewer houses for sale, buyers competing for what's available and rising prices. Herlan anticipates that this market will remain the status quo for the near- to mid-term. "The inventory isn't going to improve until we can start building more houses and faster," he says. Part of the challenge is encouraging the development of more skilled trade workers who can fuel the home construction industry.
Interest rates play a key role in the housing market. Lower interest rates increase borrowers' buying power and can increase home-buying activity. However, whether The Federal Reserve will ultimately lower interest rates in 2024 remains a question. The federal funds rate is at a two-decade high. But The Fed has indicated that it won't reduce the rate until it's confident that inflation has permanently slowed. "We've been in such unprecedented times that it's hard to predict what will happen," Graves says. "But I don't think anyone expects to see the rates change until inflation is curbed."
Even in a challenging housing market, people still need and opt to buy and sell homes. "Buying and selling is going to continue, no matter what," Herlan says. The good news is that you can navigate this market with confidence, especially if you have expert partners at your side.
Graves and Herlan offered the following guidance for how to make the most of the current real estate market:
Dig into your wants and needs
Herlan recommends investigating what's driving your desire to sell or buy a home.
Consider the following questions:
Sometimes, the answers to these questions may point toward waiting until interest rates drop or the inventory picks up. Or, you may want to sell soon to take advantage of high prices and downsize into a smaller home. "It's all situationally dependent," Herlan says.
Dive into your loan options
If you know you'll buy a home, talk with your mortgage lender as soon as possible. You want to get a full sense of all the loan options available to you. "We want to put the buyer in the best situation possible and give them the most purchasing power," Graves says.
Getting pre-approved or pre-qualified for a loan is another strategy for thriving in a competitive real estate market. The pre-qualification signals to sellers that you have the financing ready to go and that the sale may close more quickly as a result.
Find ways to avoid contingent offers
Many home buyers plan to use the proceeds from the sale of their current home to fund their next. This can lead to contingent offers, in which buyers require their home sells before closing on the one they want to buy. "Contingent offers are not as competitive as other offers and they're often unnecessary," Herlan says.
There are multiple ways that homeowners can leverage the equity in their existing home before it sells. "We want to open pathways for people they may not have thought possible," he adds. "Working with real estate and mortgage professionals ensures you know all your options."
Stay positive
Graves and Herlan emphasized the importance of remaining patient and optimistic, even in a complex real estate environment. "It can be frustrating at times for buyers and even sellers," Herlan says. "But there is a solution to every problem." Prioritize preparation and tap into the knowledge of your lender and real estate team, and you'll set yourself up for housing success.
Interested in learning more about the real estate market or current mortgage options? Connect with Northwest Bank's mortgage team today.