A big part of making your home sale a complete success is anticipating the wants and needs of buyers as well as staying on top of new trends and market fluctuations. In order to prepare for the upcoming traditional hot sales season, let’s look at what to expect for the Riverside real estate market this summer.
Out of everything that has been affected by world conditions and financial market fluctuations, real estate has been on a gradually slowing upward trajectory now for the past couple of years.
What began in 2020 as an explosion in home prices slowed a bit throughout 2021 and in 2022 is finally beginning to level out a bit more. We believe this is going to carry on for the foreseeable future, but there eventually has to be a tipping point where this growth is either minimized or reversed to some degree.
A smart and careful property owner or investor knows that a large part of any successful real estate transaction is striking while the iron is hot, so doing your best to determine where your local real estate market tipping point might exist could be essential to maximizing your opportunity. Pay attention to both the asking and closing prices of homes in your area to assist you in figuring out the direction the market is headed, but expect things to continue upward or hold steady into the summer.
Low Inventory, High Demand
The most consistent thing that has been observed over these last few years is the ongoing low home inventory coupled with high demand.
Many homeowners that may have been interested in selling their property either stepped back from that position due to economic uncertainty or took advantage of lowered interest rates to refinance their mortgages and put themselves in a more advantageous position not just for now but well into the future. The appeal to refinance with little-to-no risk helped to solidify owners’ choices in not selling their current homes and sticking with them for a while longer.
While this means fewer homes are available for sale, this does not change the number of individuals that have been looking to purchase property over that same period of time. Motivated buyers are everywhere and they are completely aware that they need to bring a spectacular offer to the table to either snatch up a property quickly or risk finding themselves in a relentless bidding war.
Additionally, new home construction has been hit hard by the supply chain issues that show no signs of truly easing anytime soon. As the price of construction materials inflates, developers and owners are taking a step back to cinch the belts on their budgets and prevent hemorrhaging finances on every project.
Slowing and more expensive construction is helping to further lower inventory while also raising market values across the board.
Increasing Interest Rates
As we touched on previously, lowered interest rates have already helped out owners and buyers, but that pendulum is beginning to swing back in the other direction.
The Federal Reserve has already begun increasing interest rates in an attempt to curb inflation, but this means increased real estate interest rates as well. These increased interest rates mean fewer reasons for owners to refinance their mortgages alongside more roadblocks and difficulty in buyers being approved for a mortgage.
As interest rates increase, mortgage lenders become more selective in their lending qualifications and approval process. Fewer loan approvals will translate to fewer buyers, but that pool is already incredibly oversaturated.