3 Trends That Are Good News for Houston Homebuyers
Watching the real estate market over the last two years has been exciting—what a wild path potential homebuyers have encountered since early 2020. We are convinced the number of families eyeing the market is still very high and are pleased to provide periodic updates. Below are some relevant facts with pros and cons as related to potential Houston Homebuyers.
Housing Inventory Available for Houston Homebuyers
One reason housing prices have seen incredible increases is the low number of homes available and both the stock of single-family and multi-family homes were extremely low. The law of supply and demand drove prices up. As prices rose, buyers took greater risks to purchase the most desirable properties.
However, the supply of available homes is on the rise; the inventory is up 39.5% in October over last year’s supply. This is good news for Houston Homebuyers.
The inventory of available homes is on the rise for a number of reasons. The number of new homes under construction has risen sharply in response to the demand. Home sales have slowed down dramatically, so more homes are currently available.
- Pro, you now have a better selection of homes to choose from
- Pro, new homes might be an option, since new home construction is sharply higher
- Pro, with an increase in housing stock, you can take your time and make a more satisfying decision
- Con, the supply is still lower than normal, well lower than the stock in 2019
Fewer Risks Needed for Houston Homebuyers
During the wildest months of real estate sales, buyers were desperately seeking a buying opportunity. The wholesale change was happening globally, a clear invitation for families and workers to change their lifestyles. In the rush to buy, normal steps in the real estate process were abandoned; appraisals, negotiations, and home inspections were exchanged for bidding wars with cash offers. Such haste can lead to overpaying and buyer’s remorse.
The market has slowed now and these risky moves are no longer needed.
- Pro, the buying process should now be smoother, with familiar steps to ensure an equitable purchase
- Pro, more information—from appraisals and inspections—make for wiser real estate purchases
- Pro, the pressure of buying has subsided and the timing of purchases should make you more comfortable
- Con . . . well, we are still trying to find a con
The Impact of Higher Interest Rates on Houston Homebuyers
Within two years, we have seen mortgage interest rates climb from record lows to dizzying heights. Ninety percent of real estate purchases begin with a 30-year amortization; in October 2022 the 30-year fixed mortgage rate was 2.909% and in October 2022 the 30-year fixed mortgage rate was 7.07%, down from a previous high. So many factors drive the interest rate, but Federal stimulus money pumped into the economy due to the pandemic produced inflation to rise sharply.1 With higher interest rates, today’s homebuyers must make shrewd, wise purchasing decisions.
- Pro, higher inflation is a necessary adjustment to help the overall economy recover from stimulus money that helped consumers survive the pandemic
- Pro, a slower real estate market should reduce housing prices
- Pro, high mortgage rates are not a “mystery,” and are bound to change
- Con, since many factors drive mortgage interest rates, predicting the direction of mortgage rates is a guessing game. We have seen predictions that vary from 4.5% to 11% by the end of 2023.
So, stay tuned and keep looking for your dream home. Be patient and be wise.
1 https://www.bankrate.com/mortgages/how-interest-rates-are-set
