Buying a Home in Today's Market

Before evaluating whether to purchase real estate in New York in today’s market, you need to evaluate mortgage rates, understand that there has been a lack of inventory of homes for sale and understand how that has affected and increased home sale prices.

Let’s look at mortgage rates: Mortgage rates fell to record lows in 2020 and 2021. At the height of the pandemic, thirty-year mortgage rates dipped slightly below 3%. This caused a refinance boom and resulted in more than 14 million homeowners refinancing their homes during the pandemic. Fast forward to April 2022, and we see that rates tipped over 5% for the first time in a decade. On June 15, 2022 the Federal Reserve raised interest rates by .75%, bringing mortgage rates closer to 6%. This is the largest Federal Reserve interest rate increase since 1994. The increase in borrowing rate has caused unease and hesitation in buyers. However, this has to be put into perspective. Historically, thirty-year mortgage rates have averaged under 8%. So, even though today’s rates have inched closer to 6%, they are still lower than historical averages.

In addition, you should evaluate market trends to determine whether to consider a purchase. The New York State real estate market showed no sign of slowing in the first half of 2022, even though there has been a lack of inventory and an increase in sales prices. Buyer demand has remained strong because of pandemic-induced changes in housing needs and preferences, especially due to the growth in the remote employment market. The inventory of available homes remained low based on the fact that home seller activity did not increase proportionately to meet this demand, according to the New York State Association of REALTORS.

The strong seller’s market that existed in 2020 persisted and even strengthened in 2021. Inventory levels remained low and multiple offer situations drove an increase in sales prices resulting in a trend which was quite prevalent across a large portion of the housing market. This year is expected to continue the upward home price trend seen over the last 18 months. Given the likelihood that mortgage rates will continue to rise throughout the year, housing affordability will remain a critical question in every buyer’s mind.

Notably, there seems to be a trend towards more homes being listed for sale within the last few months. According to the StreetEasy Market February 2022 report, there was a slight increase in available homes for sale in New York City between January and February 2022. There was a total of 16,622 New York City homes for sale in February, 549 more than there were in January. Similarly, the number of homes for sale in New York City increased by 6.8% between April and May 2022. Even though inventory was 12.2% lower than it was in February 2021, this uptick in available homes for sale indicates a move in the right direction. The number of homes for sale increased by 7.3% in Queens County, by 9.3% in Nassau and 8.3% in Suffolk between April and May 2022. While fewer homes were for sale in these counties this April than were for sale in April 2021, this increase in available homes for sale over the last couple of months is promising.

Historically, more homes are listed for sale in the spring and summer months. Prices should begin to moderate as more homes enter the market this spring and summer, thereby shifting balance between sellers and buyers towards a more normalized market. If the number of homes for sale continue to increase throughout the spring and summer months there will be a cooling of the seller’s market, albeit a slow cool. While low housing inventory and high demand will maintain a seller’s market, it will be a less intense one than at the peak of 2021. Additionally, the mortgage interest rate increase may somewhat curb buyer demand which will work to help lower home prices. In all buyers can still expect an uphill battle but perhaps not as steep.

No matter whether you decide to purchase or sell your home this year or the next, our Real Estate Attorneys at Mavros Panagos Law are here to protect your rights, explain the process to you and make your contract to closing experience as smooth as possible.

Contact Us

Eleni Mavros Panagos, Esq.

Mavros Panagos Law

200 Broadhollow Rd., Ste. 207

Melville, NY 11747

(516) 447-0455

www.mavrospanagoslaw.com