I’m the lead economist at Realtor.com. 5 things to know about the real estate market

George Ratiu is Senior Economist and Head of Economic Research at Realtor.com.

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For more than 15 years, George Ratiu has studied the housing market. He is a Senior Economist and Head of Economic Research at Realtor.com, where he focuses on trends in global economies and real estate markets. He is also a former research program manager for the National Association of Realtors, where he specialized in housing statistics, international and commercial real estate market performance, and more. (Realtor.com is owned by the same parent company as MarketWatch.)

So we asked Ratiu: what do buyers need to know about the real estate market now? (See the lowest mortgage rates you might qualify for here.)

1. Mortgage rates will likely continue to rise

“The spike in rates has pushed the monthly mortgage payment for a median-priced home $550 higher than a year ago, a significant increase given that most households are also feeling pressure from higher house prices. food, gasoline, cars and clothing. Equally important, rates should continue to rise as the Federal Reserve tightens the flow of credit,” says Ratiu, who predicts that if the pace of increases continues, we could soon see a 6% rate on loans at 30 years.

2. There aren’t enough homes for sale, limiting your choices

One thing to keep in mind is that inventory remains limited as the number of homes for sale is still lower than last year when there was intense competition between buyers. “The main reason for this shortage is that builders have not matched the pace of construction to population and household growth over the past decade,” says Ratiu. In fact, there’s a shortfall of almost 6 million homes, according to Realtor.com research, and that’s making it difficult to find enough homes for all buyers looking for a property.

3. Home prices will likely continue to rise in many markets, but not as quickly

Ratiu predicts that prices will also continue to rise due to the fact that there are still more buyers than houses for sale. “In many markets across the country, buyers are finding that they can still be outbid by someone with a cash offer or a higher down payment,” Ratiu says.

But due to sharp increases in interest rates and inflation, he says we are nearing the top of the price growth curve. “In some markets, sellers are finding that buyers are starting to spend more time searching and are less willing to give up contingencies, insisting on home inspections and asking landlords to fix a property’s faults,” says Ratio. What’s more, he says, in a dozen cities across the country, prices have fallen in recent months, indicating that the market is beginning to return to a better balance.

“We can expect prices to continue to rise in the coming months. For consumers, the bottom line is that higher spending leaves less money in their pocket at the end of each month, just as rents and house prices continue to rise at double-digit rates,” says Ratio.

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4. Sellers will always have an advantagebut it won’t be so extreme

Sellers will likely retain the upper hand in most markets across the country. However, their advantage is beginning to fade given the combination of high prices and higher interest rates – which are pushing millions of buyers out of the market. Ratiu says the slowdown in demand is noticeable as both new and existing home sales have declined over the past two months. “Twenty percent of landlords indicated they plan to move forward with pandemic-delayed plans this year and put their properties up for sale. The increased supply will lead to more competition between sellers, shifting the market further towards buyers,” says Ratiu.

5. Don’t let FOMO land you in a house you don’t like

The key takeaway for buyers this year is that housing markets are already in a noticeable transition from the blistering pace of 2021. With financial and economic pressures mounting, Ratiu says it’s important not to let the fear of missing something cause you to rush into what’s most important. the purchase of most people’s lives. “The pace of new construction is accelerating, more homeowners will be ready to put their homes up for sale and with interest rates rising, prices are already adjusting to slowing demand. Patience is generally seen as a virtue and can also be a key ingredient in finding a home this year,” says Ratiu.

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