Buyers are slowly and surely moving away from the housing market. Many don’t have much of a choice. Rising interest rates, and low home inventory is making it extremely difficult for home buyers to be successful.
With the Feds raising rates again, and with a promise of more rate height in the coming months. Many home buyers just can’t afford to buy the home they want at this time. So, some buyers are making decisions to wait and see for the foreseeable future.
Aspiring home buyers may need to financially regroup before heading back into the housing market. In our market buyers are learning that sellers are not only looking for the highest and best offer for their home. They are also looking for appraisal gap coverage.
Since many homes are going for over list price. Sellers are looking for offers with appraisal gap coverage. So, the seller is asking the buyer to pay the difference between what the purchase price is, and what the home appraises for. This only comes into effect if the home appraises for less than the purchase price.
So, buyers not only need to have their down payment, now they need an appraisal gap amount to make them competitive. This has made some buyers run for the door and decide to opt out for now!
Since the buying pool is shrinking for homes, and inventory is shrinking as well, how does this affect the housing market? Well, I think sellers will have to be competitive in when pricing their home to be able to attract buyers. The Feds are betting that the rate heights will have stabilize the housing market.
Talk it over with your agent to see what it will take to make your offers competitive. If you are in a good financial position and are able to offer appraisal gap coverage, this could be the best time to purchase. Since the expectation is that homes prices will begin to settle. Let’s keep our fingers crossed!
By R. Jones
