Elevated interest rates, low inventory slowing Holland housing market
HOLLAND — The lakeshore housing market has slowed after a couple of red hot years, but that doesn’t mean it’s become any easier for buyers.
After two years of rapidly rising values, high cash offers and dozens of bids on homes being commonplace, those factors have cooled. But elevated interest rates and lower inventory present different challenges, and the most affordable homes are still selling like hotcakes.
A big factor in the “softening” of the market is the increase and fluctuation of interest rates, said local realtor Sarah Lilly.
“We’ve seen a softening in the market, primarily driven by an increase in interest rates and instability in interest rates,” Lilly, with Five Star Real Estate, told The Sentinel. “That’s two fold. It’s limiting buyers’ buying power, and it’s disincentivizing sellers to sell. Assuming a seller will need to buy a new home, they’re buying at a higher interest rate than they have currently.”
Interest rates have risen approximately 2 percent for a 30-year fixed rate mortgage from this time last year, Lilly said, and are currently around 6.25 percent. Lilly said rates are frequently changing, adding instability to the market.
Compared to this time last year, listings are down by 24 percent, Lilly said. The homes that do go on the market are selling quickly and receiving multiple offers.
“Because inventory has been low, homes are typically selling with multiple offers because there’s such a shortage of inventory,” Lilly said. “If they’re priced appropriately, in the more affordable range … they are selling quite quickly.”
As the weather warms up, Lilly said she’s hopeful inventory levels will start to rise.
“I’m hopeful now that we’re past spring break, past the snow, we’ll start to see more inventory on the market,” she said. “It’s common for sellers to wait until spring to sell.”
Although homes are still receiving multiple offers, Lilly said cash offers aren’t “quite as common.”
And the market remains competitive, Lilly said the once constantly rising home values have “leveled off” with interest rates.
For those going through the home-buying process for the first time, Lilly recommends a close look at price points.
“Before they get too far, meet with a lender,” Lilly said. “Discuss not just what you’re approved for, but what payments you’re comfortable with. Just because you’re approved for a $400,000 home, that doesn’t mean you’ll be comfortable with the payments.”