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June 2022 Monthly Market Update

How The Market Is Affecting Maryland Home Owners

Supply, Demand, and Interest Rates

We get a lot of questions as to what’s happening in the market right now. We’re gonna take a step back and just basically give you a quick economics 101, as it pertains to supply, demand, what interest rates have to do with anything, and kind of what we’re seeing right now in the marketplace.

Right now as we’re seeing interest rates starting to increase, we see the percentage of income that has to be applied towards housing is also increasing. So three months ago, if I were buying a 400,000 house and rates were at 3% or 4%, we would essentially have to put 20% of my income applied towards my housing payment. Now we’re seeing rates in 5-6% rage which now requires more of my income having to be applied towards housing.

What we call that is the housing affordability index. We’re seeing the housing affordability index actually decline. Housing, as a whole, is becoming less affordable to the average American. Right now, what we tend to see that happen is, demands starting to soften. So demand for housing is slowing down slightly. It it’s not gone. It’s just starting to slow down a bit.

One thing to keep in mind, regardless of what market we’re in, homeowners are typically buying houses for emotional reasons. We often don’t have a short term time horizon, we have a long term time horizon. So whether or not rates are at 5% or 6%, in the long scheme, it shouldn’t make much of a difference if you plan on being a house for 7 to 12 years.

Another thing to consider is the tale of two markets. Every consumer wants to find the best house at the best price in the best condition and location. We say those houses are “In The Market”. Now houses that are overpriced or a not so favorable condition are “Out Of The Market”. Keep in mind this occurs no matter where interest rates are, what values are doing, or what the inventory is doing. There’s always a certain percentage of houses that are “In The Market” and those properties will always be in demand. It doesn’t make a difference. I remember back in 2007/2008, houses that were “In The Market”, some of them were still receiving multiple offers in a short amount of time!

So if you’re thinking about buying a house, keep in mind if you want to find the best house, at the best price, in the best location, and in the best condition, well so does everybody else!

So be prepared that if you’re buying a house, even if we see more inventory on the market, there’s only a few houses that are “In The Market”. So be prepared for competitive offers.

If you’re thinking about selling a house, make sure your house is the best house, at the best price, in the best condition, and in the best location. It won’t make a difference what market you’re in because your house will always be “In The Market”

If you’re in the market to sell your home we would highly recommend an equity analysis. By entering your address we can generate a report to show how much you could potential sell your home for. Once completed one of our team members will do a more in-depth analysis to further help you in your home selling goals!

Claim Your A FREE Equity Analysis

John Newman

Founder & CEO of The Newman Group

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