What the Last Quarter Looks Like for The Housing Market:

The housing market holds a considerable sway on the overall economy's performance as it roughly translates to a 15% share of GDP. This substantial chunk represents the importance of the housing market and its allied industries, which offer plenty of jobs and investment opportunities. Such is the impact of the housing market that there are considerable planning and policy decisions just to stabilize the market with interventions from the central bank and adjusting federal interest rates.

It is always essential to keep a keen eye on the proceedings and performance of the market if you’re looking to buy or rent yourself a place. It is especially critical if you’re a first-time buyer, as there will be many challenges that you must cater to, home repairs and maintenance being chief among them”, says Cool Air Florida, an AC installation company.

Understanding the trends within the housing market is essential for prospective buyers, sellers, investors, and policymakers. As the real estate market responds to many economic, social, and environmental factors, it experiences fluctuations and changes in demand, pricing, and supply. Traditionally speaking, the last quarter of the year represents slowing the tide when investing in real estate. A reasonable time for first-time buyers, certain factors contribute towards this trend. Let’s look at what to expect during the last quarter of 2023 regarding the housing market.

Trends Leading Into Q4:

There's plenty of evidence for slowing the housing market in Q4 or the last quarter of the year. For once, the average 30-year mortgage rate has increased from 6.48% at the start of the year to 7.8% during October, which marks the start of Q4. This increase suggests that mortgage prices are rising, and homebuyers are reluctant to loosen their purse strings. The average home prices aggravate this non-affordability and have only increased since the beginning of the year.

Thus, all trends leading up to Q4 are alarming for home buyers and investors looking to dive into the housing market. The high interest and mortgage rates are non-conducive for a buying frenzy. Coupled with these high interest rates, low inventory is a big issue. The issue of low inventory makes for higher overall prices for a unit even though the demand is constant. These increased prices and volatile economic conditions led to a cooling down of the housing market.

The Holiday Season is Already Upon Us:

Seasonal variations are another trend that significantly contributes to slowing the housing market. The winter season is the season of holidays, and people spend most of their time with their families. Apart from the apparent element of festivities, the cold and challenging weather makes it tough to relocate and even think of moving to a new place. The schools have vacations; employees enjoy extended time with their families; thus, the onus is to spend time with family. All these factors lead to lower investment in the housing market and, ultimately, lower demand.

Volatile Economy and Low Inventory Issues:

These two issues are at the heart of the slow-performing housing market in Q4. Economic conditions greatly dictate the spending power of prospective homebuyers. If the economy is performing excellent, homebuyers have plenty of savings to invest in their new home. However, vigilant homebuyers can't plan accordingly with volatile conditions and the economy showing signs of significant ups and downs. With rising interest rates and economic instability, homebuyers fear they may have to pay higher than the home's actual value.

This fear is compounded by another issue that plagues the housing market around this time of the year. The low inventory issue is currently prevalent, leading to higher demand for the already diminished inventory. It leads to higher prices, and thus, homebuyers become reluctant to buy in this stressful environment. Low inventory is due to a couple of factors, including a decrease in new construction and old homes not selling as well as they should. This issue increases demand and prices for the already low inventory, creating inflationary pressures.

What to Do During Q4?

All the above discussion brings us to our last question: what to do in the last quarter of 2023? Prospective homebuyers can often get a good deal due to anomalies in the housing market, and rates can fluctuate considerably. However, it is always prudent to wait and see how the market behaves and not rush your decision. It is important to note that a new home may sound exciting, but extremely high mortgage rates will continue to take a toll on your wallet. Invest wisely during this time, and if you're unsure about anything, take a break and let the market settle down before making the final decision.