Are you confused by all of the mixed messages?

Are you confused by all of the mixed messages?

You're not alone.

This has been a challenging year for real estate. The housing market has gone through its share of changes in the past three years. While record-level sales and price appreciation was experienced during the pandemic, questions of “crashes” and “busts” were on the radar.

Fast forward to today…

The latter hasn’t come to pass, but challenges are still present. Home values have remained resilient as the market is trying to find a balance in 2023. While economists initially anticipated a slight price decline at the start of the year, experts have revised their forecasts, predicting a 5.5% price growth by year’s end; some areas are even higher.

Favorable as that may seem, rising prices and surging mortgage rates have not favored buyers. Affordability remains an issue in the market as this year’s mortgage rate increases have doubled the mortgage cost. That’s right – doubled.  A home that you would have purchased three years ago as a first-time buyer is now double the payment it was just three years ago for that same home.

The 30-year fixed-rate mortgage averaged 6.973% this week, up from 6.81% last week.  It wasn’t that long ago that we were enjoying mortgage rates in the two’s. This is the primary reason potential home sellers are sitting on the sidelines.  The thought of a mortgage that’s edging close to 7% is daunting and for some, not optional. Some don’t qualify for the home they live in today.

Bottom line.. Mortgage rates are simply too high to expect any ‘normal’ growth in the housing market.  Even though demand, due to the lack of supply, appears to be strong, most would-be buyers are opting to wait until rates come back down.  Is that a good idea while prices continue to climb?  It depends. We currently have 59% fewer homes on the market right now in the four-county region. Simply put – most people aren’t moving because they can’t afford to replace the home they currently live in at today’s interest rates. If rates come back down to 5%, the housing market could get interesting so buying now and refinance later could get you in at a lower sales price.

Where do we go from here?  As the summer months pass and we head into the fall, I don’t anticipate much change in the demand for homes.  Surprisingly we are still seeing multiple offers and over-asking bidding going on.  This is having an effect on prices. Are we at the ceiling of rate hikes?  I wish I could say a resounding yes, but time will tell.  The negative talk about the results of downgrading of the U.S. credit rating may or may not have an affect on the housing market – how’s that for a prediction.  I, too, could be an economist!!

While it’s been a challenging year, we’ve continued to sell homes thanks to YOU and your continued support. Our business is fueled by repeat and referral business from our past clients and friends.  For this we are very grateful.  After 30+ years of selling real estate in our region, one thing remains the same.  We love what we do and appreciate those of you who, when given the opportunity to recommend our services, will gladly share our name with others.
THANK YOU