By Elle Smith,
Realtor, J&B Real Estate Is it still a seller’s market? That is the question everyone is asking. And, everyone has an opinion on what they think will happen to the market. I don’t have the answer, but I can share with you how the market today is different from the market in 2008. And, I can share what is happening in our market right now.
In 2008, the market was different than today’s market in that the real estate growth was driven by relaxed-lender practices. Low interest rates and extremely low down-payment requirements allowed people who would otherwise never have been able to buy a home to become homeowners (per Housing Capital, https://homesitewiz.com/home-renovation/best-answer-what-caused-the-real-estate-crash-of-2008.html). The low interest rates and low down-payments created a seller’s market, which, in turn, drove prices of homes up. However, when interest rates started to increase, the buyers who bought on ARMs were now upside down on their mortgages. This caused an influx in foreclosures and resulted in prices crashing.
Today’s market is not driven by these same factors. Low interest rates have certainly played a part in this becoming a seller’s market. The significant difference is the influx of buyers today. We have seen an unprecedented number of buyers entering the market the past several years, causing a strain on the housing inventory. In addition, new home builds are down. Combine this increase in buyers with the low inventory of new builds, and we have today’s market.
So, what will happen with interest rates that have already started rising? It is hard to predict, and I wouldn’t want to even try. What I can say is that interest rates are rising and, at the time of this writing, are at 5.5 percent and are expected to continue to rise through the rest of 2022. There is currently only 11 residential listings in the 21788-zip code. The Catoctin High feeder area has 45 total listings (this number includes land, lease, commercial, and residential). So, at least for the near future, the seller’s market is not ending. It will be interesting to see where the market is when my next article comes out in the fall. Enjoy your summer and support the local carnivals and farmers’ markets.