Dang it’s HOT outside! That’s also what we’ve been saying about the real estate market in Houston for the past few years, despite COVID, inflation and record high prices. But our market has finally slowed to catch its breath.
Perhaps it is the uncertainty (war, politics, inflation, supply chain, energy concerns). Perhaps it is the low inventory of homes on the market. Certainly it is a reaction to rapidly rising interest rates. Many people who were considering buying a new home are afraid they would be buying at the peak and want to see where the market is headed before they act. Even if you’ve built up a lot of equity in the past few years, you’ll be investing that equity in another property that has sharply risen in price, and it’s hard to leave behind a 2.75% to 3.5% interest rate when rates are currently in the 5-6% range and expected to rise more by the end of the year.
Once we all get back to the reality that interest rates under 5% were an anomaly and that 6-7% is still a very fair rate for a mortgage, then we can adjust our expectations to match the the home that we can purchase at this level. Keep in mind that the 50 year average for a 30 year mortgage is 8.1%.
Real estate has proven to be a strong investment in a recession, so after this breather we should expect that people will be moving money out of the rattled stock market and out of the bank where inflation is diminishing the value of their cash, and investing it into a larger home, a second home or an rental property. Our market continues to draw investors from all over the world, as we have a much stronger local economy than most of the nation and steady migration to our state. So keep the faith and call your favorite Realtor to start helping you look for that property.
