What Drives the Berks County Real Estate Market?

There is a lot of discussion about the real estate market in Berks County right now. For months, the Fed has aggressively raised interest rates, and buying a home now is much more expensive than it was at the beginning of the year.

In an effort to slow down record inflation, the Fed has also indicated that more rate hikes are on the way.

In conjunction with other worrying economic indicators, many are wondering if a housing correction is imminent. According to some, it has already arrived. First signs of a possible correction are being seen in markets that were hottest during the pandemic boom.

The price declines are expected to range from 15-25% in many parts of the country, according to some analysts.

It leaves many people wondering exactly what factors drive the real estate market as a whole. Here are a few factors that affect home prices.

Interest Rates

The real estate market is driven by interest rates holistically. People are more likely to purchase a house if interest rates are low, since they can borrow money cheaper. If your interest rate is around 2%, you can afford a lot more houses than if it's 6% and higher, and that's what people are seeing at the moment.

The real estate market doesn't always slow down when interest rates rise. Since rates move slowly, buyers have time to lock in their rates, but we're currently in a period when rates have been rising for months. It's likely to start catching up with the market as people no longer have those opportunities to lock in the best rates.

When interest rates are high, there often tends to be a slowdown in the entire market because buyers can’t afford to borrow money at these rates.

There may also be more people looking for cheaper houses to stay within their budget even as rates are high.

The Economy

Housing markets tend to be affected by bad economies. Layoffs and financial hardships plagued people in 2008. As a result, paying the mortgage on a current home becomes difficult, not to mention buying a new one.

When the economy is bad, consumers tend to feel negative about making large purchases, even if they don't lose their jobs. They have a tendency to want to hunker down during bad economies and wait out rather than make a giant leap and buy a home.

The Government

There are things the government can do to strengthen the real estate market and encourage people to buy homes, or it can do things to slow it down.

A homebuyer credit was introduced by the government in 2008 to help people afford to buy a home. A HARP program was also created to help people refinance so they could sell their homes. In spite of their small impact on the market, both helped stimulate some activity.

As well as creating and offering loan programs, the government also offers other services to make it easier for people to buy a home.

Supply and Demand

Analysts believe that the supply-demand relationship could help the housing market out right now. Demand and supply can exist at the local, state, or federal levels. Despite rising interest rates, the supply of homes is limited right now. The pandemic boom was largely a result of that. As a result, there were fewer homes available than there were buyers.

This may not shift much, so it could keep the housing market stronger than otherwise, given the economic situation.

Demographics

In conclusion, demographics describes the characteristics of a population. In the real estate market, types of properties in demand, and prices, these statistics play an important but often overlooked role.

Real estate can be affected significantly by demographic shifts.

Older people are choosing to age in place and stay in their homes for as long as possible, reducing the supply of homes. While Millennials, who delayed buying homes past previous generations, are now more interested in buying, reducing supply and increasing demand.

Visit our blog every week for more real estate articles and local Berks County articles. We can help you find the perfect home for sale in Reading and the surrounding communities of Blandon, Boyertown, Douglassville, Exeter Township, Fleetwood, Kutztown, and Oley with our powerful property search tool.

What Drives the Berks County Real Estate Market?

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