The buzz in real estate is that the market is shifting—but what exactly is causing the shift? Let’s take a look at the reasons behind the shift. 

Interest rates are on the rise. Where buyers could get a new mortgage for around 3.5% at the beginning of this year, rates are now closer to 5.5 to 6% for primary home purchases. And, if you are trying to purchase a second home, mortgage rates are 6.5 to 7%. 

Lawrence Yun, chief economist at the National Association of Realtors, recently said, “The combination of rising interest rates and rising house prices will push some would-be buyers out of the market, which may result in reduced competition after the summer buying season is over.”

But, will home prices start to decline is a question most buyers and sellers want to know the answer to. Simple rules of supply and demand say that if inventory remains low, then home prices will not drop. And, inventory levels are not increasing at all yet. Feasibly, home prices will at least remain steady because there still aren’t enough units on the market to meet current demand. 

It is anticipated that the combination of the higher home prices and elevated mortgage rates means fewer people will be able to afford to buy, and that will eventually lead to a slow-down of buyer demand. Worcester County market statistics show that one week ago, we finally saw an even number of new listings (35)vs. under contract properties (35), but this was the first time this occurred since pre-Covid industry days. This past week, under contract properties (35) once again outnumbered new listings(31). 

Lauren Bunting is a licensed Associate Broker with Keller Williams Realty of Delmarva in Ocean City, MD.

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.