Are buyers pumping the brakes?

By Matt Trudel

Summer is winding down unfortunately. Labor Day is upon us, kids are heading back to school and the nights are more refreshing. This is the time of year when buyers who haven’t pulled the trigger and put a home under contract begin to wonder if maybe they should hold off this year. Then they wonder if they should just pull the trigger on a home that might not be the perfect home, but one that will be good enough for a little while.

There are quite a few factors that play into this decision and let’s find out which ones are factual and have a solid foundation to stand on like the home they want.

First, we should start with inventory and are there enough available homes on the market to fill the demand from all the buyers who are out there looking to purchase a new home to call their own. Right now, there are approximately 50 or more single family homes currently on the market for sale, and just about as many are under contract. If we add in all the condos that are for sale and the other 90 to 100 that are about to hit the market in the next month, I feel we all can agree that there is plenty of inventory on the market.

Unlike earlier this year, when inventory was tight, that is not an issue right now for buyers. Buyers are in complete control when it comes to looking at homes, and they have plenty of options available to them. We can all agree that inventory is not an issue in today’s current real estate market.

Second, interest rates definitely affect the real estate market and slowed the market down considerably earlier this year. Rates were up around 7.5 percent and that limits the amount a buyer can spend on a house. Buyers end up qualifying for a lower purchase price and that reduces the size and qualities of a home they can purchase. Rates are down from that currently and are hovering around 6.5 percent for a 30-year fixed mortgage.

You can get closer to 6 percent with some programs right now. This is not comparable to our ultimate lows we saw a few years ago near 3 percent, but 6 to 6.5 percent is not a bad rate. As realtors we always try to remind buyers that you date the rate and marry the house. You can always refinance to a lower rate down the road. I think we should be able to agree that the current interest rates are not slowing the market greatly or deterring buyers from making the move to buy a home.

Third, but not last, is the rental market and how that market has skyrocketed and just seems to have pushed beyond limits that a few years ago seemed unobtainable. I feel we have all personally seen how rents have just gone up and up over the past four to five years. For some people renting is a better option for many reasons that we don’t need to get into.

It may not make sense to many folks why people rent rather than purchase a home when buying a home is a better financial move than renting. I would like to just raise the point that the current rental market is at all-time highs and is not discouraging buyers from purchasing a property because it is less expensive or cheaper to rent than purchase a home.

What is slowing the market down if we have ruled out these things? It is the time of year and that alone which is really the only thing slowing the market down. This is the time of year when the market just starts to slow down. The market is just starting to show those signs of buyers rethinking their plans for the winter, the holidays, and if maybe next year will be a better opportunity for them personally.

Next will be the sellers near the end of October and early November. Sellers often don’t want their home on the market for the holidays such as Thanksgiving and Christmas. Houses just don’t show as well during the winter, and sellers do not want to move when it is snowing, and the temperature is below freezing.

This is the basic trend year after year. Buyers and sellers should be prepared and adjust accordingly.

Buyers should continue to be on the lookout for homes as they come on the market because sellers tend to reduce prices and are more flexible as winter approaches.

Sellers should really have their homes in the best shape possible and have realistic ideas of their value. Having a broker with a lot of experience regardless of you being a buyer or seller is key. Reach out to Five Star Star Realty if you would like to discuss your specific scenario.

This article was written by Matthew Trudel, Owner, Broker Five Star Realty, Windham, 207-939-6971. <