We don’t have a crystal ball, but there are some things we can predict for the last few months of this year. While the market continues to cool from the frenzied pace set during the months of May through August, there is still plenty of life left in the market for both buyers and sellers in 2023. We have listed 4 take-aways for the last three months of the year below.
Interest Rates
Interest Rates will likely remain at or above 7% for the near future. While the Fed opted not to raise rates in September, mortgage rates are still on the rise this week. Many experts predict one more rate hike before the year’s end as the Fed works to combat inflation. While these rates are high compared to recent years, they are not high from a historical perspective. If interest rates are the only thing keeping you out of the market right now, you may want to reconsider. It is very difficult to “time the market” when purchasing a property as there is no way to predict what will happen to interest rates in the future. As a buyer, your best strategy is to work on improving your credit score and shop around with lenders for the best rates. Saving up for a larger down payment will also help to minimize the effect of higher rates. Don’t forget that if mortgage rates do go down in the future, you can always refinance.
If you plan to list your house in the coming months, pricing it correctly will be critical. Buyers may have to lower their budget to keep their monthly payments in line due to increased mortgage rates. They are not likely to pay more than a home’s true market value, so make sure your list price is based on recent comps.
Housing Prices
The average home price in the Miami Valley is $251,297, which is up 44.9% vs 2019 when our average price was $173,373. Year-to-date local home prices have risen an average of 4.9% over last year. This is a big improvement over the double digit increases we have been seeing since 2020.
We get asked about a “pricing bubble” at least once a week. Many think that a sharp drop in housing prices is just around the corner, but the factors at work in today’s market are very different than those during the housing crash in 2008. The primary driver of increased prices in this market is a lack of supply relative to the amount of buyers looking for homes. While there is no pricing crash around the corner, we should continue to see home prices moderate. Year-over-year increases of 3-5% should be the norm going forward.
Housing Inventories
Housing inventories have been dropping since 2019. Year-to-date through the end of August, we have 8.2% less inventory than a year ago and 33.5% less than the same time frame 5 years ago. The good news for those looking to purchase a home in the next few months is that there are a lot fewer buyers in the market. The new school year, higher interest rates and inflationary prices have driven many buyers to the sidelines for the rest of 2023. Fewer buyers mean less competition and better inventory levels going forward. If you are having difficulty finding a home that suits your needs, new construction may be a good option. We have helped 5 clients find a builder and start work on new homes this year. There are builders at many price points in our community. If you think this might be a good option for you give us a call.
Sellers need to keep in mind that higher inventory levels will mean more competition from comparable properties. Ensuring your home is well priced and properly staged will bring more buyers and better offers.
Buyers
The start of the school year always reduces the amount of buyers in the market. This time of year brings price reductions in the market as sellers get more realistic on pricing. Well priced homes in good condition still sell quickly, but we are not seeing many bidding wars or multiple offer situations. While the months of January and February tend to yield the lowest average prices of the year, they also have the lowest inventory levels. The months of October-December give buyers lower average prices than the hectic summer months, but offer more inventory than the early months of the year. If you are thinking of purchasing a home, this is a good time to start your search. If you are considering selling, you will have more buyers and may get a better selling price now than in January or February of 2024.
If you are considering selling or buying, there is still plenty of time in 2023. Just give us a call and we can put together a plan to achieve your housing goals this year.
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