When rates eventually drop housing activity, competition and prices will boom
Here in Oregon the real estate market is still surprisingly strong. I've written recently about a single family home in Eugene having 14 offers, and three separate clients purchasing properties on the coast, had multiple competing cash offers to contend with.
Rates are not great. The past two weeks average mortgage rates on 30 year mortgages has increased roughly .5% and is approaching the high 6%'s and near 7%.
Conventional wisdom concludes that more buyer's are on the sidelines due to the rising costs of purchasing property, however if the market is still active when conditions are tight, what will happen when rates drop and those buyer's re-enter the market place?
Most likely, there will be increased demand, even more limited inventory and prices likely to re accelerate.
Real Estate is geographic, so this might not pertain to all markets, but Oregon and particularly the Oregon Coast has many more buyer's than sellers. There is an extremely limited number of new construction coming to market and notable West Coast value.
Investors can still find buildable coastal lots with utilities under $100,000 and prime location ocean view homes eligible for vacation rental usages in the $350-500k range. Along the I-5 corridor there are still starter homes, with a yard and a large, in a desirable area, in the $300k range. Additionally there are various opportunities for creative or owner carry financing, terms that are less available elsewhere.
Furthermore as affordability improves and broad real estate activity and prices evolve elsewhere, buyers will look towards areas (like Oregon) for value and growth.
On the ground I've observed a near ten fold increase in the interest for coastal real estate in Oregon from out of state of absentee owners in just the past four years.
The restrictive buyer's market in retrospect might be a small window of opportunity, considering recently acquired assets could also potentially be refinanced once rates stabilize.
Even Barbara Corcoran said recently on Good Morning America...
"It's a good time to buy because the minute interest rates go down, everybody's waiting for them to go down even by a point, and when they do, they're going to come rushing back in the market, Price are going to explode, and you're going to be paying more for the same house. And you can always refinance, remember, when and if interest rates come down."
Real Estate Agent California (#02071578) and Oregon (#201231202)