MONTHLY MARKET UPDATE — AUGUST 2023 UPDATE
As we wrap up the final days of August in the real estate world, it's no surprise that activity has been a bit sluggish. There are several factors contributing to this slowdown that we need to consider. Firstly, the last days of summer holidays often see people prioritizing vacations and relaxation over house hunting. Secondly, families are busy preparing for the upcoming school year, which can divert their attention from the real estate market. However, the most significant reasons behind this slowdown are the recent interest rate hike and the looming threat of another increase.
The impact of the last interest rate hike is beginning to manifest in the housing
market. Many homeowners have seen their mortgage rates skyrocket, in some cases, doubling from what they were previously paying. This sudden increase has put significant financial strain on families and individuals, causing them to reevaluate their housing options.
At the same time, investors who have relied on rental income to cover their mortgage expenses are feeling the pinch. The government-imposed rental increase restrictions are preventing landlords from keeping up with inflation and breaking even. This dual blow to homeowners and investors alike has
created a sense of uncertainty in the market.
As we enter September, we anticipate a significant uptick in the number of properties hitting the market. Sellers who have been waiting for the right moment may decide that it's time to list their homes. However, it's essential to note that the dynamics have shifted. Buyers are now approaching the market with caution. Unless they have a compelling reason to make a move, they are taking their time to carefully consider their options. Unlike in the past, where buyers might have been more willing to overlook minor flaws in a home just to secure a property, today's buyers are more discerning. We've observed a new trend where buyers are walking away from deals or renegotiating contracts to address necessary repairs and improvements. This change in behavior is a reflection of the current buyer's market, where they have more leverage to negotiate favorable terms. Sellers should be prepared to address any issues with their properties or price them accordingly to avoid potential roadblocks in the selling process.
The first few weeks of September will serve as a crucial litmus test for the direction of our real estate market. It will reveal whether the current slow pace of activity is a temporary blip or indicative of a more prolonged trend. Sellers should take note that pricing remains a critical factor in the equation. Properties that are competitively priced in line with market conditions are more likely to attract serious buyers. The effects of the above-mentioned economic changes are being felt by both homeowners and investors, leading to caution in the market. As we transition into September, we anticipate more properties hitting the market, but buyers are approaching with greater caution and scrutiny. The key takeaway for sellers is that pricing is paramount in this evolving landscape. Homes priced appropriately for the current market conditions will have a better chance of securing a successful sale.
Absorption Rates- Single Family Detached August 2023
