Let’s Talk … Real Estate: Stay tuned to the news
By Michael Ardolino
When homeowners think of selling their house, many forget about essential factors, such as paying attention to the news and the trends that follow, because what’s going on in the world affects real estate and the prices of homes.
A nose for news
We have seen the same trends that I’ve talked about in past columns, a sellers’ market and homes selling quickly, all over the country. The bottom line is simple: what’s going on economically in our country and worldwide affects us.
I always advise people thinking of selling or buying a home to pay attention to the news. It’s vital because the real estate market always has the potential to change.
Financial experts are keeping an eye on what the Federal Reserve, which will meet in March, will do. It’s possible the short-term federal funds rate will be raised four to six times in 2022. The goal is to combat inflation. Raising the rates hasn’t been done since 2018.
The anticipation of rate hikes has already pushed rates up slightly, which is starting to affect the housing market. Last week rates started inching up over 4% for a 30-year fixed mortgage.
However, Russia’s invasion of Ukraine is creating uncertainty in the economic arena. If there is a financial fallout, possibly due to an oil price increase, it could lead to mortgage rates increasing. The flip side of the coin is that the Federal Reserve may take a less drastic approach than initially believed.
At the beginning of the week, the U.S. already saw stocks dipping and oil prices jumping. Trends such as these can make some aspiring buyers a bit hesitant to make a move. Only the future will tell if rates will go up or stay steady, even though they will still be on the historically low side.
The current trend
The National Association of Realtors (NAR) reported that “pending home sales slumped in January, continuing what is now a three-month drop in transactions.” (See graph above)
Lawrence Yun, NAR’s chief economist, stated, “With inventory at an all-time low, buyers are still having a difficult time finding a home … Given the situation in the market — mortgages, home costs and inventory — it would not be surprising to see a retreat in housing demand.”
Yun also mentioned “house hunters are contending with a number of additional market issues, including escalating home prices and rising interest rates. Rates jumped nearly a percentage point in January from December, further adding to monthly mortgage costs.”
Takeaway
Everything connects to one another and creates a domino effect. Whether you’re looking to sell or buy, it’s vital to pay attention to current events as well as the present economy. You’ll want not only to research your area, but also the area you’re looking to move to in the future. Real estate professionals can help explain everything involved in buying and selling homes in today’s market. So … let’s talk.
Michael Ardolino is the Founder/Owner-Broker of Realty Connect USA.
