The Impact of Local Housing Trends on Home Inspections

Whether you’re a homebuyer, homeowner, or a real estate professional, you need to understand the local housing trends for your and your property’s good.

These trends tend to influence the home inspection results significantly.

From fluctuating property values to shifts in market demand, various factors within the local housing market can impact the inspection process. And its findings.

In this blog, we will discuss the relationship between local housing trends and home inspections.

Impact of Real Estate Trends on Inspections

Trend#1: Home Inventory Is Low but Growing

The local real estate market has been dealing with low inventory for a while.

Now, what does it mean?

This means a scarcity of homes available for sale compared to the demand from buyers.

This is how things now stand: Although there has been an increase in inventory since April 2023, as of the end of September, there were still 4% fewer homes for sale than a year earlier.

Thus, although inventory is increasing, it is doing so slowly and is still far from reaching pre-COVID levels.

How Does This Impact Home Inspections?

The persistent issue of low inventory in the local real estate market has significant implications for home inspections.

With fewer homes available for sale relative to buyer demand, properties are often subject to intense competition. This leads to quicker transactions and limited opportunities for thorough inspections.

If you’re a buyer, then in this case, you will feel the pressure to make impromptu decisions. And (of course) this will compromise your chance to get a home inspection. Or negotiate the repairs based on the inspection findings.

Additionally, the scarcity of homes can result in bidding wars. Nobody wants to lose their potential dream home.

And so, buyers may waive inspection contingencies to make their offers more appealing to sellers.

As a result, home inspectors may face challenges in accommodating the heightened demand for their services within shortened timeframes.

Trend#2: Annual Home Values Are Still Rising

This is not a good news for the sellers. Surely.

Yes, property prices are still rising yearly, but the speed has slowed over the years. We’ll give them that.

September 2023 saw an increase in the national median home price for active listings to $429,500. However, this was only a 0.41% gain from September 2022.

By the way, if you think that prices might go down this year, let us pop your bubble. Prices won’t drop because there is still a high demand from buyers and a lack of available properties.
Although prices are declining month over month (a typical seasonal trend for prices following their peak in early summer), they will still be higher than last year.
So, if you’re a seller, this must’ve put a smile on your face. 

How Does This Impact Home Inspections?

We’d say that the real estate horizon in the country appears to be a mixed bag for the sellers. There are some favorable events…but also some major challenges you must meet.

While it’s true that property prices continue to rise annually, the pace of growth has slowed compared to previous years.

Despite the slight month-over-month price decline “because” of the seasonal trends, prices are expected to remain elevated due to sustained buyer demand and limited inventory.

This event is favorable for sellers, as they can expect their properties to get higher prices than the previous year.

It doesn’t matter how amazing this seems. It’s still important for the seller to navigate the market challenges and complexities, especially concerning home inspections.

With heightened demand and competitive conditions, sellers should ensure their properties are in top condition. This can only be done by scheduling home inspections and identifying issues before they worsen – affecting the house’s demand.

Trend#3: Mortgage Interest Rates Are Higher

In 2021, there was a record low for the average mortgage interest rate. But since then, it has increased.
In 2023, the average rate on a 15-year fixed-rate mortgage increased from 5.14% in February to 6.89% in October—the highest rate in more than 15 years—due to the Federal Reserve’s ongoing quarterly rate hikes.
In October, however, the average rate on a 30-year fixed-rate mortgage was 7.57%.

How Does This Impact Home Inspections?

The fluctuating mortgage interest rates significantly impact the real estate market and consequently influence home inspections.

These rising interest rates directly affect homebuyers’ purchasing power and affordability. Potentially deterring some from entering the market or influencing their budget constraints.

Consequently, home inspections may become more critical as buyers seek to ensure that their investment is sound and free from any unforeseen issues that could compound their financial burden.

Additionally, sellers may face thorough checks of their property during inspections. This is because buyers will become more concerned about the property’s condition because of the evolving economic landscape. Further emphasizing the need for thorough property evaluations to instill confidence in potential buyers.

What to Know Before Making A Decision?

Even though the impact of real estate trends on inspections does exist. But there’s one thing you need to know for sure. That is, you should never decide about selling or buying a house, based on these trends only. Literally!

Although statistics and trends in real estate, such as the ones we looked at, can provide you with useful context for understanding market conditions. But you should base your real estate decisions on your level of financial readiness.
Thus, even in a buyer’s market, you should only buy a home if you have no debt, a sizable down payment, and a complete emergency fund, as discussed previously.
Even in a seller’s market, you should only sell a house if you have equity, can afford the move, and have found another place to live.

Conclusion

In conclusion, the local housing trends and home inspections are interrelated. The trends play a crucial role in shaping the landscape of home inspections.

From fluctuating inventory levels and property prices to evolving mortgage interest rates, the dynamic nature of the real estate market directly impacts home inspections.

Buyers and sellers must navigate these trends carefully, recognizing their implications on property transactions.As housing trends continue to evolve, so will the significance of home inspections. They serve as a vital tool for assessing property value, ensuring buyer confidence, and mitigating risks in the ever-changing real estate environment.
Experience peace of mind with The BrickKicker. Schedule your comprehensive home inspection today and ensure your property investment is sound.