he housing market has been volatile the past few years, but it may be stabilizing. Is now the time for you to buy or sell?
There may be some changes in the market and additional trends to consider when you’re looking for your next home or thinking about selling. Even renters may have a new view of the market this year.
So whether you’re buying, selling, or just looking around, here are some changes to keep an eye on in real estate.
Read more:1. House prices are declining
The housing market has been running hot for the past few years, but it’s finally showing signs of cooling off.
In December 2022, the median home price in the U.S. was $388,472, according to the real estate website Redfin. That price was part of a steady decline from the five-year peak in May at more than $430,00. However, prices are still high. The median home price in December was 1.4% higher compared with a year earlier and still well above the $271,852 median home price in December 2017 — five years ago.
Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.2. Rents are decreasing
It’s not just the price of buying a home that is coming down but also the cost of rent. After peaking in August 2022, the median monthly rent was $1,979 in December, according to the website Rent.
That rental price is 1.41% less compared with a month earlier, but still 4.77% more than in December 2021. But the year-over-year trend continues to decline, which could be good news for renters looking to move this year.
Pro tip: If you’re renting and don’t want to move, there are ways to help pay your rent. Getting help to pay your rent will help you manage current monthly costs or save for a down payment on a home at a later date.3. Housing inventory is still low
One of the reasons the market hasn’t fallen any further may be the low inventory for homes. There were 260,064 homes up for sale in December 2022, which is a 28.4% decline compared with a year earlier.
That continues a downward trend for the number of houses being added to the market each month. And the number of homes newly listed for sale in December is quite small compared with the recent peak in June 2022, when more than 800,000 homes were added to sale listings.4. Mortgage rates still relatively high
Last year saw a dramatic increase in interest rates because of overall inflation and Fed interest rate hikes. Although inflation has cooled a bit, mortgage rates are still on the high end for potential buyers.
The average 30-year fixed-mortgage rate in February, for example, is 6.50%, according to Mortgage News Daily, which reflects a 2.5% increase compared with a year earlier. In some markets, the higher mortgage rate may offset any advantage a buyer earned from the median price of a home going down.5. Mortgage applications are in flux
Rising interest rates may be scaring off some potential buyers. The number of mortgage applications rose 7.4% for the week ending February 8, according to the Mortgage Bankers Association, but the week before saw a 9% decrease.
One possible reason for the seesaw numbers is continued volatility in the market and changes in the 30-year fixed mortgage rate. First-time homebuyers may be nervous about locking into a mortgage and new home amid this volatility. Other buyers may be worried about a possible recession this year, but there are ways to prepare for a recession if that’s a concern.6. Small markets aren’t retreating quickly
During the pandemic, Americans moved to quieter towns and areas with a lower cost of living while working remotely. But as more workers are being called back to the office, they’re moving closer to work but not selling their pandemic oasis.
Some may continue to hold on to their homes as an investment, a short-term rental, or simply a second home, which means some smaller towns and cities aren’t seeing the decline they expected just yet. The failure of a housing market to retreat could be pricing more locals out of the market.7. Buyers could have more power in the market
With prices cooling off, the balance of power may be flipping back to buyers instead of sellers.
If you’re a buyer, that could mean you’re able to negotiate on price or take more time to decide if a particular home is the right one for you. You also won’t have to waive an inspection, which some buyers were willing to do recently to secure a home in a hot housing market.
Pro tip: A tip for first-time homebuyers, as well as seasoned buyers, is don’t skip the inspection. You want to make sure there aren’t any major issues with a home before you buy or you could face big bills that could cause you to live paycheck to paycheck for far too long.8. Housing construction is slowing down
Housing construction couldn’t keep up with demand in the hot market in recent years, but new housing starts have slowed as the market starts to slow.
The number of housing units that were started in 2022 was 3% lower compared with all of 2021. And building permits were also down, declining 5% in 2022 compared with a year earlier, according to the U.S. Census Bureau.Bottom line
Whether you’re thinking about buying or selling a home, you should start looking at comparable homes so you know how much it may cost you to buy a home or sell one in the current market.
Remember that real estate — from home prices to mortgage rates — changes constantly so be willing to adjust to the market in order to have a successful purchase or sale.
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This article 8 Big Changes Happening to Real Estate You Should Know originally appeared on FinanceBuzz.