There wasn’t anything at all “normal” about the housing market in 2021 and in part of 2022. Mortgage rates were at an all-time low, and there’s a great possibility we will 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.
Looking at market snapshots provided by the MLS in various markets across the U.S., it does appear that things may be getting back to normal (not necessarily however in all areas). Even though there are more homes in the market than a year ago, there are definitely less sales which are primarily due to the doubling of mortgage rates in 2022.
The amount of time a home is on the market is lengthening, but that could 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. Now that they are ready to sell, instead of looking at today’s prices, still expect to get the higher value.
All experienced agents know that all real estate is local. 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.
Sellers who have owned their home for a number of years will more than likely 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.
Of course, there isn’t a 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.
Regardless of whether you’re a buyer or seller, don’t be concerned about the real estate market. When real estate is viewed as a long-term investment, time takes care of things that can be incredibly stressful in the short term.
For the last 50 years, the average 30-year fixed-rate mortgage 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.
So 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.