Take a moment to view the "homes for sale" ads in your local newspaper or ask a realtor to tell you the number of homes for sale in your market. You may not like the answer you hear. Although the buyer pool still remains strong, the number of homes for sale is still insufficient for the number of buyers. So the question rises to the surface: Is the housing market chilling or just tepid?
Here are some important factors to look at as you ponder the current housing market in your area.
Why is there limited inventory? The answer is not as easy as the question. Several factors contribute to limited inventory in today's housing market.
A. Home prices - although in many major markets prices are on the decline, sellers still opt for the highest and best price for their homes. The market dictates the selling price of a property not the seller.
B. Mortgage rates - the fluctuation in the 30 year fixed rate mortgage is a key factor in today's housing market. Since it the rate is fluid and has not leveled out for a sustained period, new buyers are reluctant to "dive into troubled waters".
C. The FED - the pressure from the Fed to contain inflation has an indirect impact on the housing market. With each increase in the Fed rate, buyers and sellers see the value of their dollars shrink. Buying a house joins a long line of necessities that vie for hard earn dollars and buyers must make the right decision in a tightening economy.
BOTTOM LINE: The key to remember is that although the market appears to be down to a trickle, the market is still moving. Homes are bought and sold each day even in the midst of economic conditions such as we experience today. People will still buy and sell as life circumstances change.
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