Rates, Inventory, and Home Prices ……. What does that mean for Real Estate Industry?
Rates:
Rates are hovering at a 2 year low; will we see buyers flood to the market? I don’t think so, but we did see a micro spike of refinance applications. The #1 issue is still affordable housings. A few factors that influence buyers’ power are lower interest rates that help lower your monthly mortgage payment and improve your ability to meet debt-to-income ratios. At this moment in time, consumer debt is at an all-time high, spending habits haven’t changed, and home prices are not going down that fast. Which leads us to inventory.
Inventory:
In the Willamette Valley, inventory is creeping up to 5+ months of inventory. Does that mean we are reaching a balanced market? Are we upon a buyer’s market? Will we see prices drop dramatically?
Nationally, there are 39.9% of the homes on the market have taken a price cut from the original list price. In the next month or two as inventory starts to decline for the year, the percent of the homes on the market with price cuts will decline also. Which leads us to home prices.
Home Prices:
Here is what HousingWire is saying about home prices:
The median price of single-family homes in the U.S. is inching down now and for the rest of the year. The median price of all the homes on the market is $449,000 now, which is just a fraction of a percent lower than last week. It’s unchanged from last year at this time. We’re past the seasonal peak in pricing. What we’re looking for is whether sellers do more aggressive discounting this fall than last year. Or do they simply not discount and just withdraw the listing to try again later?
The price of the newly listed homes this week is $399,998, just a hair under $400k. The new listings price is also just barely ahead of last year. That gain has been compressing.
Piatt’s 2 cents:
What does that mean? It means, there’s a natural seasonal curve here. And no, we didn’t see any seasonal curve during COVID season.
So, are we going to see prices drop dramatically? No, I don’t think so. However, I do believe the larger markets will see sharper price cuts because we saw sharper price increases. In the smaller markets, we might see prices soften if inventory continues to rise and if rates stay in the 6% range. However, we still need to consider consumer overall debt. And at this moment in time, consumer debt is at an all-time high. This is and will continue to be, a HUGE obstacle for homeownership.
Maybe… but that is just my 2 cents.
