Should I Sell my Cape Coral house? Rates are going up.
The Lakeville real estate prices have been on a rocket ship straight up the last few years but….are things about to change now that mortgage rates are shooting up at an alarming rate, buyers are asking is this a bubble and Sellers wondering…is the top in? Do I sell my Lakeville house now? Will rising rates effect the housing market, let’s explore?
First let’s look at New Construction
Lakeville new construction has exploded with the far majority of new construction in all Dakota County taking place in Lakeville. Builders have aggressively bought up lots in Lakeville and started building houses at record pace. Many homes are started but taking longer than usual due to staffing shortages, supply chain issues many supplies are on back order. It’s very common for a new construction home to take 1 year of longer. This poses a huge problem for both buyers and builders.
The Builder and Buyer dilemma
The Builders Dilemma – Inflation is skyrocketing, causing prices of lumber and building materials to fluctuate. This is causing many builders to put clauses in their purchase contracts allowing them to adjust the purchase price based on material costs going up. A buyer could end up pay much more for a Lakeville home than they originally agreed to. Without price stability is nearly impossible to price what a home will cost in a year from now.
The buyer dilemma – A buyer can’t control the price of the new construction Lakeville home they are buying. Imagine being a buyer, looking at new construction and not knowing for sure what the home you want to buy will actually cost. The cost could change a lot in the years time it takes to build. Secondly, interest rates have jumped up fast and causing mortgage rates to jump. The Federal Reserve has been in the news stating they will raise rates the rest of the year, they meet again in May 2022 to discuss rates. Heres a link to their calendar, Federal Reserve FOMC Calendar. If the Fed does what they say they will do, raise rates, they could easily jump into the 5% range. This is a perfect storm, home prices rising and monthly mortgage rates jumping way up. I could see many buyers walking away because they can no longer afford the home. I found this video on youtube Home Builders are screwed – canceled contracts coming soon.
and although I think he uses extreme language to get views aka “clickbait” there is some interesting information regarding Builders, building new construction homes in Lakeville.. Time will tell how this plays out.
Inventory is record low
Interest rates rising have already slowed the pace of real estate. Buyers on the fence, some got more aggressive to purchase a Lakeville House, thinking the rates will continue to rise and felt the pressure to get a home under the fear of being priced out of the market with home prices and mortgage rates continuing to rise. Other buyers have been pushed aside; they no longer can afford so they put their dreams of buying a Lakeville home on pause. We are still seeing multiple offers but less, showing are slowing down. Redfin posted an article where they dive into the effect of high home prices and rising interest rates Surging Mortgage Rates and Home Prices Sideline More Buyers.
Rising interest rates will likely lower buyer demand on housing and could start to see inventory climb.
Foreclosures Are Rising – but are they?
I’ve heard the chatter and see the clickbait online “massive foreclosures coming” but I haven’t seen the volume grow and I watch like a hawk. Our brokerage has sold thousands of foreclosures, (AKA REO, Bank owned) in numerous states, our firm is an expert in this area, we have not seen a spike in foreclosures as of the time of this writing. During covid lockdowns foreclosures were paused, the pause for Lakeville foreclosures was lifted September 2022, foreclosures have resumed again. We represent Asset Managers and have not seen a big wave, if there will be a increase in Lakeville foreclosures it will take time for these to go through the system. Here’s a link to find Lakeville HUD foreclosures HUD homes for sale, at the time of this writing (4.4.2022) there are none. It appears congress wants HUD to do more to help struggling how owner through their HUD HAF Program helping homeowners avoid foreclosure. This program is fairly new, we’ll have to revisit this program down the road to see how effective it was in helping Lakeville homeowners avoid foreclosure. For now it’s keeping numerous Lakeville homes from becoming foreclosed on. Here’s another resource to understand what HAF is here SWFL Attorney video explaining HAF.
Home prices have hit all time highs, this probably due to inflation and record low inventory. Case Schiller tracks home prices here is a link to see the graph Case Schiller Home price index, you can see house prices have far exceeded all time highs. Rents are sky high, at some point a top will be in and as people buy homes and then need to sell, those homes may be at risk of foreclosure due to low or negative equity, something to keep our eye on but no changes to report yet.
Will Lakeville Sellers start panic Selling trying to time the top
This is a tough question, if we start seeing national and local Dakota County, Lakeville news reporting negative housing news, like this article Pending home sales fall for fourth staight month, I believe it will start setting doubt in sellers minds that if they are on the fence to sell, now is probably the best time. Its very hard, more like impossible to pick the future of Lakeville housing market.
Inflation is Rising
The cost of gas, food daily fixed expenses has shot up in a relative short time pinching home buyers to the sidelines due to unaffordability.
Some Experts Say Home Prices Will Continue Up
No-one knows for sure. Inflation could continue to rage, the Federal Reserve could choose to reverse course and lower rates and allow rapid inflation, thus pushing the home values high at the demise of the dollar. Inventory could stay low, historically the Lakeville housing market has fluctuated from buyers’ market to sellers’ market, will this be another big year of gains, maybe. We will need to check back in a few months and see how the interest rates affect the Lakeville Housing market.
When is the best time to Sell your Lakeville House?
We’ve covered a lot of ground in this blog and you’re probably more confused now after reading about rates going up and should you sell your Lakeville house. I’ll wind down this blog with a simple summary. If you’re consider selling your Lakeville house, or your selling your house in Apple Valley, Rosemount, Farmington, Burnsville or Eagan then now may be the best time for you. In Real Estate you get lucky or unlucky. If you list your Lakeville house for sale and so do 20 of your neighbors, that’s unlucky timing, the opposite is also true, if you list your house for sale and no one else in your area is listed or the inventory just sold out and closed, that is good luck. We’ve found the best time is when you’re ready.
I encourage you, don’t over think selling your Lakeville home, or trying to time the market, start by reaching out to us here Free market evaluation – What’s my home worth, At TM Listings we’re hear to guide you through your best options, no pressure and when it works for you, we will be here for you.
Thanks for reading