"The Times They Are A-Changing": The Real Estate Market Future

Reading the Tea Leaves-2022

Bob Dylan in 1978 wrote the well-known song called  “Times They Are A Changing”. 

In one of the verses it reads as follows:

Come writers and critics who prophesize with your pen

And keep your eyes wide open

The chance won’t come again

And don’t speak too soon, for the wheels still in spin

And there’s no telling who that it’s naming

For the loser now, will be later to win

For the Times they are a changing

I wonder, could Dylan have been looking to the future for what we are experiencing now in 2022? I have to admit, figuring out the real estate market has been so easy for the past several years. What happened? Analyzing the marketplace now is a daunting task indeed, even for the most experienced and seasoned of us. 

Just a few months to a year ago we had a seemingly never-ending upward trend in property values and pricing. This has definitely changed. Long gone for most market areas are the days when a seller would receive multiple offers, have bidding wars or receive contracts with virtually no contingencies.

The market today is now faced with rising interest rates (up from 3% to now over 6%) and still relatively low inventory. The low inventory situation will likely persist as sellers not really needing to sell will be reluctant to act if they have an existing low-interest rate. New buyers needing to obtain a mortgage will be challenged for obvious reasons. 

Here in Florida, we are blessed to be the recipient of a large in-migration of new residents from several states around the country. New residents are attracted to the weather, lifestyle, and favorable business environment. This will continue. These positive forces combined with limited inventory should help support pricing for the short and long term. So what are buyers and sellers to do in this changing market?

For the sellers:

Be realistic. This is not the real estate market of one year ago. Be prepared to negotiate. Work closely with a competent Realtor who knows the market. If uncertain, consider hiring a professional appraiser to give you a realistic assessment of value and market trends.

For the buyer:

When you find the right property, act! Waiting and thinking that prices are going to pull back can be risky business given the limited supply.

The bottom line for both buyers and sellers—be patient, do your homework and most importantly don’t panic. Buying/selling real estate is not like day trading in the stock market. In spite of the challenging macroeconomic factors affecting our national and world economies, market participants (buyers and sellers) have to be willing and able to ride out these changes that inevitably come with any long-term investment.

Yes, “times, they are a changing”, but this is the natural process that a healthy market needs to go through to see long-term stability and growth.