In recent years, the real estate market has been on a roller coaster ride of highs and lows. Homebuyers are feeling increasingly locked out as home prices soar across the US and interest rates escalate to new highs. The home-buying market is becoming increasingly competitive amid record-breaking property prices which are continuing to go up during the coronavirus pandemic.
One of the primary causes of this market shift is the increased demand, largely driven by the COVID-19 lockdowns which have seen many individuals, couples, and families forced to stay at home. As restrictions have eased, people have begun to consider homeownership as either an investment opportunity or a way to gain more control over their lifestyle.
At the same time, mortgage interest rates are also increasing. Despite the Federal Reserve’s efforts to keep interest rates low, average mortgage rates in the US have risen to 3.3% – the highest since October 2020. These higher rates can have a domino effect, leading to higher home prices as lenders seek to recover the cost of borrowing and ensure ongoing profits.
Furthermore, competition is high as inventory is low. With more buyers searching for homes and fewer homes being listed, the market is becoming increasingly competitive, particularly for those who are unable to cover hefty down payments or compete with cash offers.
As the high demand for homes is expected to continue, the situation appears unlikely to change in the near future. Low inventory combined with increasing interest rates and home prices may make it difficult for everyday homebuyers to break into the market. For many, it can seem like a game of musical chairs, with a limited number of chairs and growing competition to take a seat.
The situation leaves homebuyers feeling locked out, but there are still ways to secure homeownership. Working with an experienced real estate agent can help buyers understand the shifting market and gain an edge. Renting may also provide cheaper and easier entry to the housing market as homeownership becomes increasingly inaccessible.
Ultimately, it is up to buyers to remain informed and find creative solutions to break into the competitive marketplace. With the right tools and strategies, homebuyers can still find success despite increasing prices and interest rates.