As May comes to a close, we reflect back on a Spring Market that brought uncertainty in all facets of our business. From interest rates to inventory, we entered the year not knowing what to expect from the Spring Market and as you might expect, there were some exciting developments, and of course, unexpected ones too. As we move in the Summer, we decided to ask each of our team members to comment on the major factors that have affected our market this spring. This is what they had to say:
Market Predictions Brian Boehm
The shortage of inventory and the volatile interest rates have created a ‘locked-in’ effect for homeowners who are hesitant to give up their historically low payments while simultaneously keeping a wistful eye on their growing equity. At some point in the future, these scales will balance and either the desire to utilize the equity will outpace the comfort of their current payment or interest rates will ease creating the same effect. While I doubt we will see that equilibrium in 2023, I do think that by the end of the year the change will begin. Until then, prices will keep going up unless inventory miraculously increases; so settle in and kick up your feet, massive changes would come from an outside source and not from current market conditions, IMHO.
Inventory Shortage Carey Martin Donaldson
We continued to experience a significant inventory shortage this spring, leading many to question when the traditional "spring market" would begin. Several factors have contributed to this situation. There is intense competition in the housing market, with multiple offers remaining the norm. Preparation and endurance remain crucial for navigating this competitive market. Additionally, we have witnessed a notable increase in the number of people relocating to Birmingham. However, it's not all negative news. Over the past few years, our real estate market has become less dependent on seasonal fluctuations. As a result, although we may have experienced fewer homes for sale during the spring market, I anticipate a steady stream of inventory throughout the typically slower summer months.
Multiple Offers & Bidding Wars Mimi Nolen
In today's Real Estate market, bidding wars remain the market standard. Buyers are actively competing with each other, and the intense competition and bidding wars have continued to drive up prices. The pressure to make attractive bids and outperform competitors adds to the complexity of the process and something we work very closely with our clients to fine tune. Bidding wars are a reflection of high demand and limited supply, I predict they are here to stay for the foreseeable future.
Interest Rate Volatility Jacob Dorsett
Higher interest rates can discourage homeowners from selling their properties. This happens because homeowners with existing mortgages may have lower interest rates on their loans compared to the prevailing rates. If they were to sell their homes and purchase a new one, they would have to give up their lower interest rate and take on a new mortgage with higher rates. As a result, some homeowners may decide to stay put, reducing the overall housing inventory available for sale in the market.