“THE REAL ESTATE MARKET IS CRASHING”! Some version of this headline has been used in the national media a lot since mortgage rates started climbing, so today we will take a look at the YTD data regarding residential real estate in Lowndes County.
If you have followed my recent updates, you know I like to compare year over year in addition to this year compared to 2019 which was a good, normal, pre pandemic market. You’ll notice in the year over year data that new listings, pending sales, closed sales, and even inventory levels are down, so essentially market activity is down. However, the median sales price is up almost 10% year over year to $229,500. Even a small adjustment to the interest rate can have a notable impact on the housing market, so with the mortgage rates more than doubling within a year, most people would expect a housing meltdown. Without a doubt, the activity levels have been significantly impacted, BUT this has not caused a decline in prices. And the activity levels look pretty similar to 2019, so while activity levels are down from the Covid frenzy era, they are comparable to a good, normal market (minus the low inventory levels).
When projecting the housing market, many people viewed it through the lens of a stock market trader; “Sell everything, and cash out while your equity is up”. The problem with that is most sellers are traditionally buyers as well, so if they wanted to cash out, what would they do next? Looking at our still historically low inventory levels, they have decided to stay put for now. For many homeowners selling would mean trading their sub 3% mortgage rate for a 6.5% rate, and if there is not a significant need to move, it makes sense to stay.
Where will we go from here? This depends largely on where rates go, and it sounds like the Federal Reserve would like to see a rise in jobless claims or much lower inflation before stopping the continuous rate hikes. If the Fed signals they are going to stop the rate hikes for the foreseeable future, I could imagine fixed mortgage rates falling to the 5.5% range and staying there for a while which would get the housing market looking more normal and predictable. Even with rates in the 5.5% range, housing affordability has been severely impacted, so the days of double digit appreciation are most likely behind us.
Call or message me anytime with questions regarding your individual position! I want to be your go-to Realtor that you recommend to all of your friends and come to with all of your questions! Hope to hear from you soon!
