May Market Update

May 27, 2022
Everyone is asking one big question right now:

“Should I wait?”

Whether you are a buyer, or a seller people are asking, “should I wait to get into the real estate market?” “Is it maybe going to cool down a little bit?” “Should I sell my house right now or the price is going to continue?” I figured it’s best in order to get back to the classroom, we've got a couple more lessons before school is out, and let's explain what's happening.


In 2019, we all of a sudden saw, unfortunately, Covid come into existence and people decided that they weren't going to list their house. Why? Because they didn't want people coming into their homes. That created one of the biggest problems in the real estate market known as an inventory shortage. And when that happens, it's just simple supply and demand. And when you don't have enough of something with a great amount of demand, prices tend to go up. 


And then 2020 came around, and here's the situation. There are so many people in rental markets across the country in major metropolitan areas where they wanted to get out of cities into great suburbs, especially those in Connecticut, Massachusetts, Rhode Island, and Florida; and they started to move from places, like California and New York to these great states. That caused even more demand in the marketplace for an already low inventory market causing prices to once again increase.


Well, 2021 rolls around and all of a sudden, we've got a big issue on our hands because more and more employers are telling their employees, “We need you to work from home”, either due to Covid or for the fact that they realize that it was actually more affordable for them to do. So, what does that mean? Now people, if they do not have studies or do not have offices at home are going to have a more difficult time operating and working from home, especially if they've already got a full house and so they're going to enter into the real estate market and start looking for properties, and that cause prices once again to increase. 


Now as we enter into 2022, here's the situation. Real Estate investors are in the market, downsizers are in the market, upgraders are in. Everyone is in the real estate market…especially one big group, and that's Millennials. There are 72 million Millennials in the country and we're becoming of that age where, “Hey, it's time. We're starting families. It's growing and we all want real estate” and now you literally have as many groups possible entering into the real estate space, which has once again caused prices to increase. 


So where are things going?

People ask me this question every single day. “Should I wait in order to buy a home?” This is what I can give you for a recommendation. As we look towards 2023, we've got a few major factors that are happening. Look, we have no Crystal Ball, but here is the fact that we know. Interest rates are on the rise as well, along with prices. And why are they? Well, watch the last market update, but interest rates are actually a good thing to see rise. Why? Because our economy has been responding to all of this inflation that's happening. Back in 2019-2020, the government printed around $1.9 trillion in order to get the economy rock and rolling and to help families across America. Well, when they did that, they actually started the inflation process and when that happens, the only way to combat it is to actually raise interest rates and that affects buyers every day and how it's affecting them, is those prices here are starting to stabilize. Still increasing, but starting to stabilize. Why? Because buyers are getting priced out of the market. 


What do you mean?

Well, if an interest rate increases from about 4%, where people used to be to around 5%, that could mean that monthly payment can easily increase somewhere between 150 and 200 dollars a month easily, just in the financing. If that could tip the scales between what they could afford and what they can't afford, they’re now no longer a buyer for some of those homes that are out there. What does that do? As you take buyers out of the market, that demand starts to decrease a little bit and so that supply also starts to increase and prices start to stabilize.


Okay, so what's going happen next? Well, these 72 million Millennials, we're not going anywhere. We still need houses, just because prices increase and just because interest rates increase, doesn't mean that they're going to stop needing properties. In fact, they're going need them. But unfortunately, they're going to just get used to paying a little bit more for their money than they did before. And is this a bad thing? Not at all. Interest rates historically have been around 6 to 7 and 8% and at times have been as high as 18%. It's still an amazing time to borrow money and to buy a house and a lot of these Millennials believe so.



So, is it a good time to wait?

Probably not because these prices, even if they start to increase just marginally, they're still going to face a huge issue when they look to go get money as it's going to become more expensive. So what does the future look like for 2023 and beyond? Well, many analysts are actually disagreeing with each other. Some believe that we’re only going to increase about 5% in appreciation. Some as high as 14%. But either way, what you can take from this is real estate is still projected and forecasted to increase and appreciate over the next few years. 


So if you've been on the fence, if you've been waiting and asking yourself this question, “I'm exhausted because I've been trying to get a house and I can't”, don't worry, you're not alone. There's a lot of people who really see the value in real estate. If you're curious about that and want to understand our 14 step plan in order to secure a home, please reach out to one of our agents, we'd be delighted to help you.


If you're a seller in this market, what that means for you is you might see fewer offers on your property, but you're still going to see a lot more as so many buyers are interested in this current marketplace. 


And now, without further Ado, here's the Connecticut, Massachusetts, Rhode Island and Florida real estate numbers for May 2022.


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