A slowdown in the real estate industry: the most common contributing factors/ Why real estate industry is slowing down
Change is the only constant. And, when there’s a real estate involved, fluctuations in the industry trends are pretty obvious.
After years of soaring demand, exploding house prices, and rising real estate sales, the market eventually seems to be slowing down. Besides, mortgage rates are rising. And the increased costs of financing a home have varied the calculations for many homebuyers. As a result, home sales have been declining in recent times. Here are the contributing factors that are slowing down the real estate industry.
More price stakes
Undoubtedly, homes were selling so quickly for a spell. And, often with bidding wars, sellers usually get more than they have asked. However, as affordability challenges squeeze buyers and there is less competition to buy, some sellers lower their prices.
Economic Slowdown
The economy has a direct correlation to employment. As there is a significant slowdown in the economy, people are laid off from their jobs. Consequently, the real estate is not bought as previously.
Stricter lending standards
Flexible credit benchmarks in the early 2000s left many individuals with mortgages they could not afford. This scenario then deteriorated into rushing foreclosures across the country. Lenders have intensified their qualifying requirements since then.
Higher demands and lower supplies
There was a surplus of housing inventory earlier in the Great Recession. At that time, construction was booming at most places across the country. That reserve, plus the surge of foreclosure properties added to it, led to dropping prices. Currently, the supply is on the opposite end. The number of listings across the nation is extremely limited.
Fewer people are buying homes
Increased mortgage rates and economic instability are forcing individuals to wait to buy their new houses. The flux in the market creates challenges for people to relocate to new places. Also, more people are not looking for a new house because of the risk associated with employment.
Conclusion
The recession will touch most facets of the economy, and housing is no exception. Home prices may even continue to increase, despite all the unfavorable economic news. Also, there are more than one contributing factors that form a slowdown in the real estate industry. However, if you are looking to buy a new home, do take professional advice. Knowing the correct worth of your property is more important. Connecting with a real estate appraisal expert is the right move to get a precise valuation of your house.