Navigating a Complex Market

Real estate is a sound long-term investment. Like any other market, the residential real estate market ebbs and flows. Many real estate markets saw meteoric increases in value over the past 18 to 24 months due, in part, to unprecedented demand, historically low home inventory, and bottom-of-the-barrel mortgage rates. Many would-be-buyers with down payments in hand were simply priced out of the market.

With the Federal Reserve on a steady path of interest rate increases to curb inflation, mortgage rates will rise. Mortgage rates are expected to decline again once inflation is under control. Temporarily higher borrowing costs will temper demand which, in turn, will slow the appreciation of home values. Buyers that were previously priced out of the market and buyers that are just starting the home buying process will likely see these temporary conditions create windows to find value and opportunities that were not available during the prior 18 to 24 months period.

To properly navigate a complex market like most of us are seeing right now, it is important that purchase and sale agreements include terms that mitigate risk to the greatest extent possible. Properly crafted contract terms can and should include conditions that reflect a buyer’s expectations in relation to home value and condition, mortgage rates and costs, and other variables in a real estate transaction that are prone to short-term shifting.

Now, more than ever, it is important for Buyers to align themselves with an experienced Real Estate Attorney who will ensure that their contract includes terms that adapt to unforeseen risk created by the short-term dynamics presently at play impacting most real estate markets. For any questions regarding any or all real estate matters, you can contact Kevin Mitrick at kmitrick@lavellelaw.com.