Written by David Dodge 

With the spring selling season right around the corner, many homebuyers and sellers are wondering what to expect from the real estate market. According to CBS News business analyst Jill Schlesinger, buyers may see some relief as the market begins to shift.

Home Prices Remain High but Growth is Slowing

Schlesinger notes that home prices are still significantly higher than they were five years ago. "If we look at existing home prices just five years ago, the median home was about $266,000. Now it's $396,900—that's a 49% increase in five years, more than twice the rate of inflation," she explained.

One of the biggest hurdles for buyers has been high mortgage interest rates, which have nearly doubled over the past five years. This has made affordability a significant challenge for many prospective homeowners.

Signs of a More Balanced Market

However, Schlesinger also pointed out that the rate of price increases is slowing, which could be good news for buyers. "There are more homes on the market, and we're seeing inventory rise year-over-year at the highest level in three years," she said. More inventory means less competition, which may lead to better opportunities for buyers. 

Another encouraging trend is that, according to data from Redfin, homes are now selling for about 2% below the listing price on average. "Remember those intense bidding wars?" Schlesinger asked. "They’re still happening in some areas, but in most cases, we are seeing a more normalized pricing process."

Tips for Homebuyers This Spring

For those looking to buy a home this spring, Schlesinger emphasizes the importance of financial preparedness. "Run the numbers," she advised. While the traditional recommendation has been to put down 20%, she acknowledges that many buyers today may only be able to put down 10%.

She also cautions against outdated affordability rules. "Some say your housing costs shouldn’t exceed 28% of your gross income, but that’s not always realistic anymore," she said. Instead, she urges buyers to ask themselves: "If I buy this house, will I still be able to cover all my other expenses? Will I need to sacrifice my retirement savings or my kids’ college fund?"

Is Homeownership Still the American Dream?

With rising home prices and high mortgage rates, some may wonder if buying a home is still the best way to build wealth. Schlesinger reassures that homeownership isn’t the only path. "You can absolutely build wealth in other ways," she said. "Instead of putting money into a down payment and mortgage interest, you could invest in retirement accounts or other investments to build your own American dream."

Final Thoughts

While the real estate market remains competitive, the signs of slowing price growth and increased inventory could present new opportunities for buyers this spring. Whether purchasing a home or investing elsewhere, Schlesinger’s advice is clear: carefully consider your financial situation and make decisions that align with your long-term goals.

The real estate landscape is shifting, and now is the time for buyers and sellers to make informed decisions. Buyers should take advantage of increased inventory and potentially lower prices, while sellers should be prepared for a more competitive market. The American dream is evolving, and whether through homeownership or strategic investments, financial success remains within reach. The key is to stay educated, plan wisely, and take action at the right moment.