We field calls on a weekly basis from clients – past, present, and future – who have questions about the current state of the housing market. While there are plenty of headlines out there, we want to provide you with the most local, real-time data available which, as you can see, remains positive. Facts over hype is always best.
Keep in mind, all the market data available today (October 2022) is based on deals written 2-3 months ago. For that reason, we will not have an accurate look at how the higher interest rates are affecting home sales until the end of the year.
When we compare year-to-date to the same timeframe in 2021, the entire market is down 7.5%. However, houses in the $500K+ market are up 27%, houses selling for $500-$750K are up 20%, houses selling for $750K-$1 million are up 54%, and homes selling for over $1 million are up 45%.
What’s causing the decline in houses under $500K (and especially under $300K)? It comes down to inventory – we’re still in a huge inventory crunch for homes at those price points.
If we just look at August-September of last year compared to this year, the market is still very stable – up 17% for homes valued over $500K. Looking at the actual number of sales, activity is still very high – especially compared to pre-pandemic levels (WOW on that… please see the graphic).
Because there is still such an inventory shortage, in all price points, pricing has remained competitive. Right now we are seeing the leveling out of pricing and not as many offers.
Interest rates on 30-year fixed mortgages are at the highest they’ve been in 20 years. They’re hovering right around 7% (give or take). We anticipate this will have an effect on the number of sales which will have an impact on home prices. How much still remains to be seen. There are many moving parts to this equation (inflation/world stability/natural disasters).
Twenty years ago, we rarely saw ARM (adjustable rate mortgages) loans in Northeast Wisconsin, since buyers here tend to be more conservative and there were only 2 and 3-year options available. But now, with the fixed mortgage interest rates higher, more and more people are seeing the benefits of ARM loans. ARM’s today can go up to 15 years.
Our advice? Shop around. We have excellent banks and credit unions in our area. They each offer very different options and opportunities. It would be wise to understand the various products and to know what works best for you. We recently (as of last week) worked with a client who secured a 10-year ARM at 4.25% from a credit union.
The Immediate Future of our Real Estate Market
Right now I can tell you it is quieter than it has been for a while. A six-month supply of inventory is considered a balanced market. We are currently at a four-month supply which is still considered a seller’s market. Moving to a more balanced market is healthier for everyone. This I do know for sure…Whatever happens, we will figure out a way to help our clients navigate the scenario. This is my 25th year in the business … we always find a way. We continue to be busy. AmyJo just accepted our first offer which will be closing in 2023. Onward!