Limited inventory remains a major challenge in the Capital Region’s residential housing market. That’s according to Patt Wattam with RE/MAX First, who says even in the face of higher interest rates, the market remains “pretty healthy.”
“It’s just a lack of inventory,” Wattam says. “We just want to see some new construction going on out there. The limited inventory is driving everything. If we had more homes for sale, then there’s a lot more movement that can happen. It’s hard for buyers to find the house they want, and they want a perfect house, so they don’t have to make any updates.”
Recent reports have suggested that the Federal Reserve is prepared to cut interest rates beginning next month.
The latest consumer price index data shows a 0.2% increase for the month, putting the 12-month inflation rate at 2.9%.
That cut could be the beginning of relief for some in the market. Wattam says rates are not the same problem they were last year.
“I’ve seen more activity in the past, in July and June, which is normal for this time of year, but we’re just seeing a real uptick and I don’t find that rates are as much of an issue as they were, let’s say a year ago,” she says. “I think that rates have settled down. People have gotten used to the fact that we’re not going to have 2% interest rates. If you want to move, you know it will cost a little bit of money.”
She cites the late 1970s and 1980s, when interest rates were around 18% and homes were being bought and sold.
“People who need to move because they’re getting transferred, they’re getting divorced, their families are growing, those people are going to go ahead and buy,” she explains. “It’s the people who don’t have to move, they are the ones sitting on the fence. I think the general market is the people who are going to move because they want to.”
A wrinkle in real estate transactions will take effect on Aug. 17. The National Association of Realtors announced a landmark $418 million settlement in February. As a result, NAR can no longer require a broker listing a home on the MLS to offer any upfront compensation to the buyer’s agent. Agents also must enter into a written agreement with the homebuyer―including a negotiated commission and fees―as the court settlement also ended the standard 6% Realtor commission.
“Everybody is already prepared with new purchase and buyer/broker agreements,” Wattam says. “But the main thing people have gotten wrong is that it’s not about commissions. It was about transparency. Luckily, in our market, our listing agreement always spelled out who was getting paid, so for us, it’s just doing some more paperwork because the commission has always been built into the purchase price.”
Read More: See what challenges the Capital Region residential housing market faces