As 2022 comes to a close...

This year has certainly been one with many twists and turns.  Coming out of the 2020-2021 housing market which was fueled by incredibly low interest rates, buyers making decisions to move based on the pandemic, and the issue of not knowing what lied ahead – It created a massive demand for home purchases as consumers competed to win a sales contract and get a home with a 2 to 3% interest rate. It resulted in outrageous house price appreciation of approximately 34% nationally in just a two-year period. It boxed out many first-time homebuyers who found themselves unable to compete against buyers willing to place a non-contingent offer above full price. That was then…

As we started 2022, to say that we were braced for just about anything would be an understatement.  In January, we started the year with no change to interest rates and an active first quarter; however, it quickly became obvious that change was coming – change in the form of six interest rate hikes between March and November. (I didn’t see that coming) I don’t have to tell you the shock waves that sent into our housing market. Through November, sales are now down 47% over this same time last year. In the four-county region, prices are down 13% since April, which was when the cost of money began to increase. Keep in mind that values rose 34% over 24 months, but that equity you’re sitting on now could be vaporizing if these rates continue to stay in the 6 to 7% range next year.  My crystal ball is still a little foggy, but my guess is that we’ll see rates remain in these ranges for a while.

2022 started with sellers getting over asking price in a matter of days, but has now become a more ‘neutral’ market with homes taking 25 to 40 days to sell, depending on the area and price range. Yes, some sellers are still experiencing multiple offers and quick sales, but it’s not as common. The median price has gone from $620K back down to $550K, giving first time buyers hope that they too may someday be able to own a home.  We’re even starting to see first time buyer grant programs with down-payment assistance again – something we hadn’t seen in awhile, so not everything about these changes in the tide are bad.

To be honest, it all depends on what your future plans in the real estate market are.  If you were one of the lucky ones who refinanced during those amazingly low rates, you’re probably not too interested in trading that in for a 6 ½% loan today – hence why we continue to have inventory shortages. But situations change and stuff happens. I’m seeing people deciding to move to other states for job opportunities or a change of scenery.  One thing is for sure - homes will continue to sell in our region.

Seldom do I make predictions about what will happen next for our market. There are just too many variables, but if I WERE to wager a guess… and that’s all it is… I’d say that we will continue to see decreases in home values over next year’s market. We have had a tremendous trajectory in our prices in a very short time. Now that the cost of borrowing has more than doubled, prices are flattening and in many cases we’re seeing a decline. What we experienced over the two-year pandemic wasn’t normal. Incremental increases are sustainable – the jump in value from 2020 to 2022 wasn’t incremental. It was a frenzy.

Another factor is that builders are still few and far between, providing us with enough new housing to meet the increasing demands of our local growing population.  As high mortgage rates, elevated inflation and stubbornly high construction costs continue, they act as a drag on builder confidence going forward. We need stability in the market for them to jump back in.

As we close the books on 2022 and begin a fresh start in 2023, our hope is that you’ll think of us when the discussion turns to Real Estate.  Whether you’re just curious, or have an immediate need, we are here to serve YOU and all of your referrals.  It’s because of YOU that we continue to enjoy success in our profession and love what we do.

May the holiday season find you beginning each day with a grateful heart.


All the best to you,
Carol

With Fall Comes Change

It’s time to dig out that umbrella and do some of those housekeeping details that we love so much like cleaning out the gutters as the leaves begin to come down. In a normal real estate cycle, during the fall months we typically see fewer homes on the market as the holidays approach.  But, this market is anything but normal or typical.

I could have told you what goes up eventually comes down – or at least slows down, but what I didn’t predict was the severity with which the interest rates would jump.  While 2.75% wasn’t sustainable (congratulations to those of you who capitalized on those rates), who would have believed that just six months later we would exceed 7%?  For those who aren’t looking to purchase a home, you may not realize what that does to a buyer’s payment but here’s an example.  If I was showing you homes around $700K at the beginning of the year, you now may only qualify for $450K now based on the interest rate increases.  And they’re not done raising those rates yet…

What has this done to our local real estate market?  It’s obviously slowed things down. In October, sales were half as many as we had during the same month last year.  The time it’s taking for homes to sell on average has tripled, going from an average of 7-10 days to over a month to find a buyer and sellers in most cases are fortunate to have one or two offers – certainly not a dozen or more that you’d receive during the pandemic.

Oh yes… the “pandemic”.  That thing that happened that caused so many people to make a move to a more suitable home while we all hunkered down.  Well, turns out some of those buyers are now feeling a little remorseful about what they purchased.  At least their interest rates were low!  But we’re also seeing people who are now wanting to make moves and are hopeful that their homes are still able to be priced higher than the last sale, but that’s not always the case.  In our current market, 46% of sellers are having to reduce their prices before they’re able to successfully put their home in escrow.

Are prices coming down??  Not yet… but as sales continue to slump, my crystal ball tells me that it’s only a matter of time that we start to see some of that “pandemic pricing” start to wane.  Real estate is all about supply and demand.  During the pandemic, there was tremendous demand for homes.  Sellers were able to capitalize on that frenzy, but right now the frenzy has subsided.  People will always be buying and selling homes due to job transfer, divorce, death, or just your typical “this house doesn’t work for us anymore” situations.  The key right now is that it’s not an ‘anything goes’ market. That’s why we’re seeing so many price reductions.  Sellers aren’t giving their houses away, but they have to come to the realization that buyers do have some say in what they pay for a home, not to mention that banks are being much more cautious about what they are willing to lend.

So what does the future look like in local real estate?  Well, we will still be standing tall when the dust settles. After 30 years in the business, we have seen many cycles and know how to weather the storm, but I do think that come January when real estate dues are due, there will be a number of part time Realtors who will exit the business. It’s considerably more work to sell homes (or should I say we earn our keep) during markets like this. I’ve gone back to paying for professional staging of homes and making sure that we’re the best value, not only in what we offer our clients but also helping our clients look their best to their potential buyers. I honestly like this type of market much more than the frenzy. Now it’s about providing the quality service that makes a difference – not who can write the fastest, non-contingent offer for a buyer who may become remorseful about their purchase.

While interest rates may not look desirable to everyone, life happens.  People will always be buying and selling homes.  I think the current pace will continue into next spring.  Economists believe that rates will come down, which will cause more to jump into the market and those with the current interest rates to refinance. If rates don’t come down, watch for more homes to come on the market and prices to level off even further as we find a balance between home prices and what buyers can afford to pay.  The reset won’t be comfortable but it’s necessary in order for us to return to a more ‘normal’ real estate market.

Be sure to watch for ‘Coffee with Carol’ a livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to.  Send me a friend request and I’ll see you soon!

If you or someone you know is looking at the market and has questions, I’m here to help.  I appreciate your referrals more than you know!

Slump or Slowdown...

Slump or Slowdown… What's really going on in the housing market?


When it comes to the housing market, there are many ‘predictions’ of what’s happening. First the obvious; higher interest rates has led to fewer qualified buyers causing the frenzy of the pandemic-induced race for space to be in our rear-view mirror. But has it stopped all sales?  That doesn’t appear to be the case. It’s still a busy, but not frantic market. Let’s just say we appear to be moving at a more normal pace with homes taking 25-30 days to sell instead of 3 or 4.

While sellers were used to having a dozen offers to choose from, now they are lucky if two or three buyers show interest in their home. This change has led to buyers feeling a little more in control of the situation and has caused them to expect concessions in the form of credits and repairs – how quickly the tide has turned!  Not surprising since they were at the mercy of sellers for over a decade. So while you may not see prices coming down significantly in your neighborhood, behind the scenes there may be more negotiating going on than you know.

And don’t get me wrong, prices are coming down in the form of price reductions but that’s because hopeful sellers were pricing their homes too high to begin with – 48% of homes that went into contract in our region last month had made a price adjustment.

Since the market shifted in April, prices have adjusted - in some areas more than others – but prices had gone up so significantly over the past two years that sellers won’t be under-water on their values anytime soon. Most sellers are sitting on a fair amount of equity that they’ve built up over the past decade. With the rise in interest rates, they won’t be tempted to refinance and pull out that ‘free money’.  Thank goodness, since that’s what contributed to our last collapse. In some areas, home prices are still on the rise but the rising cost of living and increasing interest rates are starting to have an effect. With one more increase in mortgage interest rates expected in 2022, it’s anyone’s guess what that will do to our buyer pool, much less in 2023??





While the rates are still significantly lower than they have historically been, the price of a home is ten times what it was in 1982.  Rates are probably the most significant change in our market today.

Increased interest rates have a much more significant effect on a buyer’s monthly payment than a reduction in the home’s price of say $20,000.  This is why if someone is considering buying a home, it’s wise to do it while rates are still relatively low and not wait.  Many buyers who thought that the market would slow down and prices would come down have been priced out of the market by the increase in the cost of money.

For sellers who are considering making a move, the ‘anything goes’ market is now in the history books.  We’re back to the market of pricing it right and baking cookies to give that “there’s no place like home” feel.  This type of market is one that I enjoy much more than the frenzy.  It’s fair on both sides of the aisle. If you’re thinking of buying or selling, or you know someone who is, I would love to be of assistance in the process.


Be sure to watch for ”Coffee with Carol” a daily livestream on Facebook that will look at what’s happening in our local real estate market, keeping you up on the trends and giving you an opportunity to ask the questions that you want answers to.  Send me a friend request and I’ll see you soon!