Happy Birthday Matilda!

I’m sharing a picture of my daughter today simply because she celebrated her birthday last week, and she’s one of my favorite people in the world. (And yes… she’s obviously my favorite daughter!) It has absolutely nothing to do with today’s topic – I just think she’s pretty amazing, and I hope she had the best birthday.

Now, onto real estate…

One of the questions I’ve been hearing a lot lately is, “What’s going on with the housing market?” Many people have noticed that properties seem to be sitting on the market longer than they were a year or two ago, and some have wondered if the market has completely changed.

After more than 20 years in real estate, here’s my perspective…

I do think higher interest rates have caused some buyers to hesitate. But I also think we’ve become accustomed to something that was actually very unusual.

For years, buyers enjoyed historically low mortgage rates. I can remember loans as low as 3.375%. Those rates were incredible -but they weren’t normal.

Today’s mortgage rates, generally ranging from about 5.75% to 7% depending on the buyer and loan, are actually much closer to what has historically been considered normal.

Sometimes we forget about the 1980s. Many first-time homebuyers today weren’t even born then. During that decade, mortgage rates averaged around 12%, and at one point climbed above 18%.

When you look at history, a 6% mortgage really isn’t considered a high interest rate. The average interest rate for a 30-year fixed mortgage over the past 50-plus years is approximately 7.7%.

I think we’ve simply been spoiled by an unusually long period of exceptionally low rates, and over time many people began to believe those rates were the norm. They weren’t – they were the exception.

The market has certainly shifted from the frenzy we experienced a few years ago, but people are still buying homes, people are still selling homes, and life continues to happen. Jobs change, families grow, people retire, and new opportunities arise. Real estate hasn’t stopped – it has simply returned to a more balanced pace.

As always, every market creates opportunities. The key is understanding today’s market instead of comparing it to an unusual moment in history.