How Does Recent Banking News Impact the Real Estate Market?

How does recent banking news and events impact the real estate market? The topic is complex. I reviewed several articles, including one from Barrons.com ("How the Housing Market Could Be Affected by Bank Failures) to get an idea of their analysis.

From the article:

"The initial effects of the bank sector upheaval that began a week ago have reached the housing market. So far, it isn’t all bad news—but it will take time to see how the recent changes play out."

In the short term, we have seen interest rates drop back under 7% (check out the Mortgage News Daily app if you want to watch what's happening there in real time). 

​The possibility of a bank collapse is a concern that could have ripple effects on various sectors, including the housing market, home prices, and mortgage rates. If a bank were to collapse, it could lead to a decrease in the availability of credit, making it harder for people to get loans to buy homes. This could cause a decline in demand for homes, which in turn could lead to a drop in home prices.

What's interesting is what we know about the housing market in general right now. We have VERY low inventory, locally and nationally. A recent article from HousingWire said we may be as many as 6.5 Million units (homes) short! If we think about how to fill that void with single family homes, assuming we have plenty of new home starts (or, beginning of building), they estimate that we could see that gap shrink in the next 3-4 years.

However, since many builders rely on credit to finance their building projects, that could get tricky if credit becomes more difficult to obtain. It's easy to see how these new home starts could be dampened by the banking issues we're seeing today. That could mean we see inventory stay low.

What should you expect? People will still need to buy and sell houses. There are life events that still drive a need to move. I call these the "D's": Death, Divorce, Diamonds, Diapers, Degrees. In other words, they're life events that make a sale or a move necessary. People making a move "just to move" as we may have seen when the opportunity was great over the last couple years will not be nearly as common.

If you are looking to sell your home in the near future, I would suggest making plans to get your home ready for sale by decluttering, depersonalizing, and taking care of issues. A home in prime condition will be a lot more attractive to buyers, who are now more particular about what they want and are willing to deal with. Every perceived fault has a dollar sign attached to it. Speak to an agent (like me) who can help you determine the things you should do that offer the best return on your investment. 

If you are looking to buy, speak to a mortgage professional. Some find it helpful to think about a purchase in terms of monthly payment rather than overall purchase price. Start thinking about what your actual priorities are, and how long you want to live in the home you're purchasing. Perhaps consider lower price point areas that may offer opportunities for greater affordability, especially if it's your first home. 

If you're looking ahead to buying or selling a home in the greater Portland, Oregon metro area in the near future and aren't sure where to begin, I'd love to connect to help you start off on the right foot. I'm Jennifer Schurter, a Realtor and expert marketer in the Portland, Oregon metro area. 

Jen@JenSchurter.com