CRG Market Report: Responding to Interest Rate Increases

You’ve heard the endless reports of strong market activity and now as mortgage rates and inflation are taking center stage, many buyers and sellers are wrestling with concerns over market performance and wondering if they should hold their real estate plans.

Should You Worry About Another Housing Bubble?

Top industry experts say no. Concerns that the current housing market mirrors that of 2006 AKA the Great Recession have been on the minds of buyers and sellers for many months. However, real estate analysts both nationally and within our local market, are warning buyers not to wait for another bubble to pop.

In the video and blog below we take a look at why and what you need to understand when buying and selling a home in the Myrtle Beach area. 

Understanding Current Market Conditions

At CRG, we bring you a monthly overview of real estate and construction statistics in the market; however, sometimes the most informed decisions need a deeper look into both what’s happening now as well as historical trends. Tracking home sales and inventory since the onset of COVID, we’ve seen some dramatic shifts in all aspects of home buying however as the Federal Reserve makes moves to fight inflation that is running at a 40-year high, many are starting to fear they have missed their window of opportunity to cash in on recent market highs.

 Last week the Federal Reserve approved an interest rate increase of .75%, the largest since 1994. Officials say that rate rises won’t stop there in an effort to fight inflation that is running at a 40-year high. Read more @ wsj.com. 

Naturally, mortgage rates increased to include the change in fed funding rates. While anticipated, this announcement compounds fears that have been quelling up for some time as buyers face inventory shortages, rising house prices, and construction delays.

Why you shouldn't fear a bubble

Perhaps the most important factor of our current real estate market to understand is how it differs from that of 2006 AKA the Great Recession. And while according to a recent Redfin survey, 77% of homebuyers believe there’s a bubble  where they live, market analysts are warning buyers to not wait for another bubble to pop. Mainly because while the issues might be the same, the important difference is in the cause!

While there are several compounded issues at play, we can boil it down to two factors:

1. Supply & Demand Are Driving Prices- There are just not enough houses vs 2006 when lack of inventory was driven by real estate investors.
2. Lending Has Changed – Previously subprime mortgages were popular that lacked guidelines to ensure the ability to pay such as verifying income and credit scores. Leaving many bowers unable to pay.  Investors had also driven the increased home prices of the early 2000s compounding the issue as homeowners had no equity in their homes to utilize as leverage

Opportunities In Today’s Market

All market factors considered; this does not mean that people who are willing to purchase today should wait for better times. While sellers know they can get a higher price for their home, they also know they will be paying a higher price for their new home. Therefore, many are slow to enter the market; however, those downsizing or moving to a more affordable area are in the best position for buying and selling right now.

First-time home buyers or people who are looking to purchase a primary residence should consider that rent prices spiked over the last two years and will continue to do so. So rather than wait to purchase, buyers need to be strategic, working with experienced agents and lenders who can assist you in not only finding your dream Myrtle Beach home but who truly understand the nuances of lending and programs available to buyers.

Fed Action Is GOOD News

Consumer-price inflation rose to 8.6% in May, its highest rate in 40 years, a situation the Fed must take seriously. So, while increasing interest rates are painful and the process of turning the tides of inflation won’t be easy, it’s inevitable. The Fed is simply taking the necessary steps to avoid a bubble of a new kind by getting a grip on inflation before things get worse.  Read More: Inflation Demands Bold Fed Action 

Make a Strategic Move With CRG

It’s easy to let the news give you pause in your new home plans and we do recommend cautious consideration for anyone buying a house at any time! However, at CRG we are dedicated to finding tailored solutions that will assist buyers of all levels. Give our dedicated  client care team  a call today to discuss your plans and connect with a Realtor who can help make the process stress-free!