Interest rates are rising. If I’ll be honest with you I thought this should’ve happened two years ago. When we saw the market taking off in June of 2020, there probably should’ve been a steady increase of rates starting right then, but there wasn’t. And I do get it and you do too, that we didn’t know what 2020 and 2021 would bring and to have an economy that people were steadily spending money in was a good idea, and to have mortgage rates rise from as low as 2.75% all they way up to almost 6% in just a matter of months has really made an impact on what an average person can afford as a monthly payment.
There still isn’t enough homes on the market. We show homes in most price ranges and if you go in some of these homes you think who would buy this? And then the next day there are 3 offers on the table. We can point all the way back to 2008 on this issue. So many builders became anxious when the bubble burst in 2008 and they severely decreased their new home production or they completely went out of business. The US has been on a trajectory for the past 12 years of a housing shortage. Homes don’t get built overnight.
What does all of this mean for the equity in your home? We expect home prices to settle a little bit, meaning getting $30,000 over asking for your house if you choose to sell it probably won’t happen (or maybe you’ll get lucky and it will) AND I want you to keep something in mind: Before 2020 the year over year appreciation on your home if you live in Oklahoma was around 4-6%. Meaning your property value most likely increased by 4-6% each year. In the past two years however you could expect your property value to increase by 12-15%, which means you gained twice or even 3 or 4 times the amount of equity in one year in 2020 and 2021 than you did in 2018 or 2019.
So the equity you would’ve gained in 6 years, you actually gained in a total of two years, accelerated appreciation. It’s not likely that we will see a huge price decrease, what’s going to feel like a price decrease is that home prices may return to their normal appreciation of 4-6% with some prices dropping of course depending on condition location, etc.
In the past two years you could expect your property value to increase by 12-15% year over year, which means you gained twice or even 3x or 4x as much equity in one year than you did in 2018 or 2019.
For sellers this means that you can still cash in on a hot market, it just may not feel as “hot” as it once was, but your equity is likely still there. If you have questions please fill out the contact form below, I’m not going to force you to sell your house, in fact just last week I talked someone out of selling their house…
