The new normal: 7% interest rates and the role of the real estate professional

Over the past 18 months, inflation has firmly established 7(ish)% interest rates as the prevailing norm in real estate markets. While predicting rate decreases remains challenging (my inclination is towards a soon, but only time will reveal), these 'new normal' market conditions have caused stress for both buyers and sellers, as expected. Beyond the fluctuations in rates and low inventory, the past 18 months have proven (again) the meaningful role of a skilled real estate professional at the core of the deal.

Here’s why… 

Buyers

Elevated sustained mortgage interest rates have compelled buyers to become more creative and resourceful when making offers. 2% rates make it easy to pull the trigger as a buyer – even in a competitive situation. On average, prices went up last year while inventory levels (in most places) plummeted, creating a dynamic marketplace for buyers to navigate. Sound guidance around timing, strategy, the right loan options, and logistics made the difference between a buyer having success in 2023 or not.

Sellers

Elevated mortgage rates may have tempered pandemic-level buying demand, but they have also resulted in fewer homes coming to market. With fewer comps and regular interest rate shifts, it has become extremely difficult to properly price homes for success. You can't just list a home (for any random price) on a Thursday and collect offers on a Monday like you could just 18 months ago. Yet we all agree prices are strong in most situations, and sellers have benefited from diminished inventory levels. Questions like “does the recent interest rate hike mean we should recalibrate the asking price” or “is now the right time to list” were common themes of 2023 and persist today!

 But that’s not everything.

As much as price and timing matter with these rates, so does the outreach and marketing efforts of the listing agent. Getting the listing in front of the right pool of (fewer) buyers makes a huge difference when rates are at 7%. For these reasons alone, the full-service listing agent became even more indispensable to a seller looking to maximize the sale and have success.

The elephant in the room

Don’t shoot the messenger just because what I’m about to say is unfair, but more deals than ever are selling off-market despite MLS rules trying to prevent it. The best realtors have access to inventory that most buyers won’t see. And that isn’t changing just because new rules have passed with MLS boards.

 Want the best deals or exclusive opportunities in your market? Who you work with will dictate whether that goal is realized. Are you a seller looking to maximize the buying pool? Probably want to work with a company with lots of buyers searching for off-market opportunities.

 Elevated mortgage interest rates have turned an already challenging real estate market into a more difficult place for both buyers and sellers. Paradoxically, this shift may be the latest reminder of the importance of working with a the right real estate professional. In a world of sustained higher interest rates, having good real estate representation has become synonymous with success.

That’s no longer an opinion.