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Stay Informed: The Latest Insights on Housing Market Trends

Monday, October 16, 2023   /   by Chelsea Hilderbrand

Stay Informed: The Latest Insights on Housing Market Trends

Here’s what you need to know about the current housing market.

What’s going on with the housing market? Today, I’ll share some of the latest trends in real estate and discuss how it impacts buyers and sellers.

Currently, the state of the real estate market is characterized by low inventory, with very few homes available for sale and limited monthly sales. Many have speculated about the impact of rising interest rates on property prices. Despite significant interest rate increases in the past 18 months, prices have not declined.

One question is how high interest rates would need to go to lower prices. To answer this, it’s crucial to recognize that supply and demand are the primary factors influencing prices. In situations where supply is low and demand is high, as seen in 2021, prices tend to rise. Conversely, prices tend to drop when supply is high and demand is low, as observed in 2009.

“Despite my initial expectation that prices might fall as interest rates approached 7%, they held strong after a slight dip.”

The key question is what happens to prices when both supply and demand are low. Often, people focus on either supply or demand alone, but the interplay between them is critical. Despite my initial expectation that prices might fall as interest rates approached 7%, they held strong after a slight dip. This resilience can be attributed to factors on the supply side. Homeowners with low mortgage rates, typically around 2% to 3%, are hesitant to sell due to the prospect of significantly higher mortgage payments if they were to move. Additionally, builders face increased costs when borrowing money, leading to reduced construction activity.

The real estate market is currently experiencing low demand due to higher interest rates, but it also faces low supply for the same reason. However, the predominant influence on prices today appears to be the low supply, as the number of homes for sale has remained under 15,000 this year. The question remains: is there an interest rate high enough to significantly dampen demand more than it hinders supply? Ideally, we won’t have to find out.

If you want more information about the market or have any real estate questions, call or email us. We’re happy to help.

My Home Group
Rob Hale
1744 S Val Vista #206
Mesa, AZ 85204

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