Ok friends, let’s shine the light on a couple myths floating around out there regarding the real estate market right now. There’s no denying that it’s a different market, and sometimes conflicting signals. But that’s kinda the case every year, and misconceptions floating around about this market, coupled with people filling airtime trying to “predict” what’s going to happen next aren’t making things any easier.
So what, exactly, are those misconceptions, and why are they incorrect? Let’s discuss some of the common myths in today’s housing market that are hurting both buyers and sellers, including:
- Owners with low mortgage rates will never sell. Many buyers that purchased a home a few years ago locked in record low interest rates on their mortgages. And with interest rates significantly higher today, there’s a belief that those homeowners will never give up their low interest rates and sell. But the truth is, there are a ton of life circumstances that could force a person to list and sell their home — like a new job, growing family, or change in their financial situation — no matter what kind of interest rate they have on their mortgage. Mortgage rates don’t play a role in what people want, they play a role in what people can afford.
- “High Interest Rates” are keeping people from buying. No, they aren’t. In Lancaster County, closed sales are up 25%, check out our last Market Update to see those stats.
- As rates go up, home prices will go down, so I should wait. Many buyers believe that as interest rates rise, home prices will fall — and, as such, they’ve been waiting to make a move until prices are more affordable. But the relationship between interest rates and home prices is impacted by a variety of factors, including demand and available inventory, and the “prices will fall as rates rise” belief just hasn’t been true in this market. The demand is still outpacing the supply, and even so, lots of people are successfully buying homes! Don’t expect this to change anytime soon, prices aren’t coming down.
- The market is about to crash, just like in 2008. The prices and fierce competition in today’s market are reminding some people of the conditions before 2008. But today’s market lacks the fundamental issues that caused the 2008 crash, including bad lending practices (they were legislated out), and the majority of homeowners had little to no equity in their home back then. The recent rise in prices was driven by completely different factors — including generational trends, more than a decade of under building housing, and demand outpacing inventory — making a similar crash highly unlikely. How can I be sure? Well, how about this next point.
- Mortgage defaults are at the lowest rate in 23 years. All time, historically low. According to Core Logic, default rates (people not paying their mortgages) was only 1.1% of mortgages. People have jobs, they are sitting on tremendous equity, they didn’t take risky loans to buy, and there simply isn’t going to be a “wave” of foreclosures.
- Home owners have lots of equity. ATTOM Data recently put out a report that says 49% of US homeowners are “equity rich”. This means, again, it’s a great time for them to sell, and most people selling now are able to use that equity to easily move up, or move down, or simply cash out and use the money elsewhere. Prices are stable, and rising, at a much more sustainable pace this year versus prior years.
So, what does it all mean for you? Exactly what we have been saying. Now is a good a time to buy, or sell, as any. People move because they want to, or need to, and despite headlines to the contrary, yes you can buy. We are helping people do it all the time. We can help you too. Let’s talk about it.
Looking to sell or buy anywhere in Central Pa? Call 717-371-0557!
Your Friends in Real Estate,
Jason Burkholder Real Estate Team
Jason Burkholder
Kelly Burkholder
Adam High
Jaci Hoosier
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Jason Burkholder
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717-371-0557 direct or text
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Jason Burkholder Real Estate Team
Welcome Home Real Estate
717-298-8040 office
57 E Main St
Lititz, Pa 17543
www.JasonsHomes.com
