The conundrum of low interest rates.
In a perfect world there would be low interest rates and high inventory.
Low interest rates are implemented in the current economic environment to artificially stimulate demand and to keep home values from falling. As a consequence, intended or unintended, historically, low interest rates, over time, have inflated home values. Another phenomena low interest rates have had on the real estate market is low inventory, which in turn, has contributed to driving up home prices. More home buyers are competing for fewer properties. There are those buyers who are willing and able to pay more than asking price to beat out their home buying competitors. Sad for home buyers who get left out.
Not sad but a win-win for home sellers.
Realtor dot com recently reported on September 25, 2020:
The lack of supply has been the catalyst for heated market conditions as median listing prices last week grew at a record 11.1% year-over-year—more than double January’s pace—marking the 19th consecutive week of increasing price tags, the report said.
Moreover, selling in a hot market throws sellers in the home buying market, competing with other home buyers for choice properties. Unless home sellers have a plan what their next move will be, they'll have a difficult time securing their next home, as so many first-time home buyers are finding out.
When it can be better for home buyers to buy when interest rates are high is subject for a future post.