The housing market in 2021 and part of 2022 was anything but normal. Mortgage rates were at all time lows and may never reach those levels again. Double-digit appreciation drove prices to new heights. Low inventories fueled by high buyer demand made multiple offers a normal expectation.
As we look at the market snapshots provided by MLS in the various markets across the U.S., it appears that things may be returning to normal, but not necessarily in all areas. While there are more homes on the market now than a year ago, there are less sales due primarily to the doubling of mortgage rates in 2022.
Time on the market is lengthening but that can be explained by the removal of approximately 15 million homebuyers who now have affordability issues. When the market shifted, sellers expectations for what they thought their home is worth are not keeping pace with current conditions.
Some sellers who didn’t put their home on the market in 2021 and 2022 for whatever reason, remember the peak of the prices they could have sold their home for and now that they are ready, instead of looking at today’s prices, still expect to get the higher value.
Every experienced agent knows that all real estate is local and while you can look at trends on a national basis, it takes a knowledgeable professional to assess the local market, even on a neighborhood basis, to determine what a property will reasonably sell for currently.
A seller who has owned their home for several years is going to realize a good profit and return on their investment. If they are ready to sell in today’s market, that should be their focus and not on what might have been, had they sold at the recent high.
There is no way to predict when prices will achieve their high whether it is in stocks, bonds, commodities, or housing prices. It is only after it has hit the pinnacle and started retreating, that It can be identified.
Don’t be concerned about the market you missed regardless of whether you are a buyer or a seller. When real estate is viewed as a long-term investment, time takes care of things that can be incredibly stressful in the short term.
The average 30-year fixed-rate mortgage for the last 50 years is 7.76% according to the Freddie Mac PMMS survey. The current 6.60% is considerably below that benchmark and it appears to be trending lower. The current rate is what today’s buyer must pay to borrow.
Home prices have experienced 7.16% appreciation for the last fifty-five years according to the Federal Reserve Economic Data of the St. Louis Fed. Compared to the average inflation rate of 4.3% for the same period, homes provide a hedge against inflation and a significant contribution to personal net worth.
If you’re in the market to buy or sell, contact your real estate professional to find out what your market is doing and what options you have available.