We’ve all gotten pretty used to the way things have been in real estate for the last few years: interest rates were very low, selling times were very short, and particularly in Richmond, buying a home was an incredible investment option as home prices climbed up and up.
Between the years of 2013 when the industry started showing clear signs of recovery, until where we are now, property values have slowly been recovering, even surpassing where they were before all hell broke loose when the market crashed. Meaning that in recent memory, things have been pretty smooth sailing for us and our clients.
Depending on how old you are, you might have a different perspective on what is the ‘standard’ industry climate. Our team members are all in our thirties, so we’ve gotten used to the low interest rate and high buyer competition climate that we’ve seen hit an all time high in the last couple years. Our more seasoned clients and peers in the industry, however, might be used to interest rates around the 7% range, or even higher.
What you’re used to, of course, all depends on perspective. But regardless of that perspective, we expect to see some shifting in market behavior, particularly as it relates to financing and competition.
The Impact of Rising Interest Rates
We’ve all heard it: rates are going up. And while we think that that’s a reflection of a healthy, stable market, it will have some impacts on the industry. We expect to see demand for large suburban homes go down, not only because larger homes are pricier, but because building material costs are going up as well. And of course, when borrowing money is more expensive, buyer demand will go down. We likely won’t see the insane bidding wars that we’ve seen for the last few years, because buyers will be at least a little fewer and farther between.
Fewer Buyers? More Inventory
Inventory has been TIGHT. If you’ve been paying attention at all, you probably know that, but as Realtors, we feel it even more. Finding our buyer clients’ homes often feels like looking for a needle in a haystack. But less buyer competition in the coming years means that there will be more options on the table for those who do elect to buy. And who doesn’t love perusing through more gorgeous homes??
When does it end?
Changes - in interest rates, buyer/seller behavior, competition, you name it - can be scary, and many of our clients are concerned about entering a market that is being watched so closely as it adjusts. But that’s how we see it - as just a slight adjustment.
The market had so much recovering to do, so as it gets back to normal, we don’t predict there’s anything to be too concerned about. Being informed is the first step, and you’re already on top of that just by having read this far!
We’d love to chat more about the market, what we expect, and what that means for you as a buyer or seller.