The classic question today's buyers have as interest rates are rising and they have "bidding fatigue" from putting in strong offers and not getting the contract, again and again. I've found that if a buyer doesn't get an accepted offer on a home after three attempts, they tend to want to take a break. If they persevere to five offers not accepted, they wait six months. Unfortunately, in many cases, when they come back to purchase a home, the prices have increased, adding to their frustration. It's critically important to know the seller's goals and get the offer accepted on one of the first homes your buyer loves.
It seems to make sense that prices will adjust now that there is pressure on interest rates and consumers are pressed with inflation concerns. The problem in the Seacoast Region of New Hampshire for housing prices to weaken, demand must decrease. Unfortunately for buyers, we are seeing a strong migration of cash buyers that can now work remotely.
Many of these relocated buyers are selling from metropolitan areas after great appreciation and can purchase a comparable home in New Hampshire and still have profits left over! New Hampshire is also attractive to those wishing to live in New England or acquire a second home investment because of its tax-free status for income taxes and most sales taxes. Who wouldn't want to: Live Free or Die?
In addition, with the dollar depreciating due to recent economic changes, why would real estate, an asset you can touch, reduce in value? While we may not see the adjustment increases, we have in the last two years, it is highly unlikely to truly "crash" without a wave of foreclosures. Since most people are able to sell for more than their original purchase price, it seems unlikely.
Buyers are concerned about interest rate increases shown with a marked drop in mortgage applications, but the actual prices are unlikely to move much in the Seacoast area because of the shortage in housing inventory for those moving here. The biggest factor buyer's will be considering is if the increases in interest rates reduce the amount of home they can afford the monthly payments on.
No one can predict the real estate market, but many who sold in recent years hoping for the market to have a decrease in home prices, like the ones that occurred in 2008, have been disappointed. That market was partially driven by "stated income" lending practices that allowed buyers to exaggerate their income and over leverage themselves. Many foreclosures followed.
This home value growth has largely been migration with limited inventory and caused sellers to be afraid to sell, because of limited choices for purchasing a new home... unless they are moving out-of-state. In addition to the value of the dollar being lowered, investors are now moving into real estate portfolios that include single family homes for rentals and Airbnb income. Young people are delaying home ownership at greater rates as well and purchasing at higher income levels.