The Sky is Not Falling
‘Stop freaking out, spiraling and thinking of every possible way to get rid of this phone because you think you like Apple better. Give it time.'
That is the text my son sent me after I switched from an iPhone to an Android and declared that I was giving up and going back to Apple. I was happy with my phone. Everything from my watch to my Airpods seamlessly integrated and upgrading to the newest iPhone would have been so easy. But, the Google Pixel has a lot of nice options and I wanted to change things up. As soon as I made the switch, I panicked. I felt like Chicken Little running around yelling ‘The Sky is Falling, the Sky is Falling! I'm being super dramatic, but that’s how the change felt.
Just like I did with my phone on day one, many buyers and sellers are panicking. I have conversations on a daily basis advising them to stop reading the clickbait articles that play to these fears with headlines of an 'impending crash', or ‘the bubble bursting'. The last two years' historic low interest rates combined with even lower inventory levels to create a severe imbalance between supply and demand. This fueled competition and resulted in unprecedented gains in home values. What I’m seeing now is a stark contrast to those conditions, but it is not an indicator that the market will crash. It is a return to normal and there is an adjustment period that will take time to get used to. Buyers are still buying and sellers are still selling. Rising interest rates are having a stabilizing effect and resulting in more inventory. More inventory means less competition and more choice for buyers. For sellers, the days of multiple offers over asking may be over but home prices are still at an all time high. All the sellers who have been on the sidelines because of fears of not being able to find suitable housing can now confidently enter the market. Home values are still increasing, they are just doing so at a more predictable pace. None of these facts are reasons for panic, doubt or fear. Buyers 6 months ago likely paid more for a home than today's buyers will, but the reality is their monthly payments are remarkably similar because of rising interest rates. They both paid what the home was worth to them at the time and what they could afford based on their budget. One has the luxury of a super low interest rate for the life of their mortgage and the other will have an option to refinance in the future if/when rates drop. Neither scenario is better than the other, they are just different. Kinda like my iPhone and my Pixel.