If you've heard anything about the housing market over the past year, it might sound something like the gladiator games of ancient Rome—ruthless and not for the faint of heart. But times are changing, and as we move into fall 2022, we can expect some shifts in the market. Here are 6 things that you need to know about the new housing market.

After a long upward climb, prices start to moderate with slower appreciation

Well, a bit! According to Realtor.com, during August, one in five sellers dropped their asking price, which indicates that the annual appreciation rate is slowing. That's about 20%, which doesn't seem like a lot, but at this time a year ago, that same number was 11%—meaning that the number of sellers lowering their asking price has almost doubled. While not all economists agree on the rate at which appreciation will slow, this trend indicates an oncoming change.

Demographics continue to apply pressure

Part of what's made the market so competitive lately is the relatively low number of houses available for sale. This is an issue that's been years in the making and it's largely due to two demographic trends. The first is millennials—62 million of them—entering the housing market to shop for starter homes. On the opposite end of the spectrum, we also have 55 million baby boomers who are living longer, healthier lives than previous generations—and not leaving the housing market. Both groups competing for the same limited inventory has put unprecedented pressure on the market as a whole. This is in addition to home building dropping off by 40% in the last 10 years.

But options ARE increasing (a bit)

Because of that demographic pressure, demand has been higher than supply, creating an environment that's great for sellers but a challenge for buyers. While the current number of homes available isn't high per se, demand has been lowered by economic uncertainty—meaning that houses aren't getting snapped up as quickly, creating more options for buyers.

Bidding wars slow down

The "bidding war" has been a major feature of the housing market for the past few years. But because demand has lowered recently, there isn't as much cause for multiple buyers to compete over the same property. While we are still in a seller's market overall, some equilibrium is returning to the market.

Mortgage rates

We probably don't have to tell you that mortgage rates are higher right now, what with the average rate for a 30-year fixed rate mortgage creeping towards 6%. What we can tell you is that some relief for buyers may be in sight. Experts from the Mortgage Bankers Association, the National Association of Realtors, and others have projected that mortgage rates will begin to stabilize in the coming months. By this time next year, average rates could even dip below 5%. In addition, Adjustable Rate Mortgages (ARMS) are making a return, and they will serve to lower rates as well—by offering lower start rates for 3-5-7 year adjustable rate loan options.

Rest easy—it's not 2008

You may have heard some speculation about whether the recent economic downturn (and in particular the issues with the housing market) will result in another housing bubble crisis à la 2008. It's a scary thought, but rest assured that the factors that created the 2008 housing bubble aren't present in today's market. Required credit scores for buyers are much higher, mortgage underwriting standards are much more stringent, and there's no oversupply of housing as there was in '08—among other things.   

The bottom line

Whether you're buying or selling, confident or uncertain, a local real estate agent is still your best bet for navigating a changing market. Agents from The Masiello Group can provide you with the expert insights that you need to come out on top, whether the market is stacked against you or not.

The Masiello Group is a second-generation family company that has been a trailblazer in New England real estate since 1966. With now more than 35 offices throughout northern New England, we're the largest residential real estate firm north of Boston to offer a complete suite of home services, including buying, selling, mortgage, title, insurance, relocation, and more.

Our agents are eager and excited to meet your real estate needs!

You can find more information on today's market and other real estate trends by reading our blog weekly at https://www.masiello.com/news-and-updates/.