The Fall and Housing Prices

Make sure you read that right! No, I’m not talking about a fall in home values. We’re talking about crisp mornings, golden leaves, and everything pumpkin! While the housing market tends to cool down with the weather, home values are up 1% year-over-year. Sellers are still getting, on average, 100% of their asking price, and although we have more inventory than we’ve had in years, we’re still leaning towards a seller’s market.

The Fall

Just like the leaves, interest rates are widely expected to continue falling. I'll admit, I was expecting more activity from homebuyers when interest rates first started to drop. My feeling now is that these initial decreases are boosting buyer confidence, but it hasn’t yet translated into people jumping off the fence. I suspect many are waiting to see how far rates will fall. The big question is, will everyone jump in at the same time?

Personally, I’d prefer to buy when rates are slightly higher but during a quieter time of year. You’ll face less competition, which greatly improves your negotiating power.

The Spring Leap

I know it’s still Fall, but I’m already talking about Spring. The next six months could be pivotal for buyers. Regardless of interest rates, Fall and Winter always see less market activity than Spring. Over the past two years, average Spring prices were 8-15% higher than in Winter. What happens this coming Spring will depend on several factors:

Interest Rates:

As mentioned earlier, there will come a point when interest rates fall enough to pull more buyers back into the market. While housing stock has increased, there’s still not enough supply to meet demand. If buying activity surges, competition for homes will too.

Government Policy Changes:

Starting in December, the government is increasing the mortgage amortization period for first-time homebuyers from 25 to 30 years. This not only reduces monthly payments but also increases borrowing power. I’m not suggesting you should spend more, but it’s helpful when your money goes a bit further.

Additionally, buyers will now be able to put down less than 20% on homes up to $1.5 million. This allows more people to purchase in a higher price range without draining all their savings.

Sellers

Sit tight. The coming months will provide a healthy market, so if you need to sell, you’ll likely be satisfied with the result. However, if you’re not in a rush to sell, Spring is likely to be a hotbed of activity due to the factors I’ve mentioned.

Buyers

You can wait for lower interest rates, but it’s important to consider the big picture. I just renewed a mortgage at a variable rate because I know it’ll decrease. There’s nothing stopping you from beating the competition by locking in a slightly higher rate now, for a longer-term gain later.

I’ve been helping people buy and sell homes for 17 years, through every type of market imaginable. I specialize in helping sellers maximize their home value with a suite of industry-leading services, and I’ve guided countless buyers to make the best possible moves. When you’re ready to start planning your next step, get in touch. I’d love to chat!

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