I was curious what everyone’s thoughts are about the real estate market right now. I live in Alberta Canada and the market last year was on fire, but this year with rising interest rates, some people (including myself) are looking at getting back into owning a home before it becomes too expensive because the rates are so high. A 5 yr fixed rate is currently above 3%, which we haven’t seen in a very long time.
The part that confuses me and where I could use some help is where inventory comes in. In typical supply/demand, if there’s little inventory, this drives prices up because the potential buyers only have a small pool of inventory to buy from, therefore creating what we call a “sellers market”. Right now, there is definitely very little inventory on the market!
At first I thought that this would cause pricing to shoot up, and to some extent that is definitely happening. Some properties are going into multiple offers, and others are just out right selling for 100% of their list price; things we have not seen here for practically a decade! BUT and this is a big BUT - with rising interest rates, there won’t be the same demand for housing as there was before because now it will be too expensive. Current home-owners who were thinking of selling and upgrading won’t be able to so now they will stay with their existing homes and perhaps fix it up instead, and those that were in the market looking for a home might not qualify for a home any longer, or be able to afford one!
Therefore, based on the above, I suspect that interest rates (and not supply/demand) will have a greater affect on housing prices. For this reason, I am not speculating, nor buying a home in the next 3-6 months because of the market or prices, but rather because we need a home and I’d rather pay off my own mortgage than someone else’s.
I’m just curious what everyone else thinks is going to happen???
