Real Estate Trends
This year has been full of change. From interest rate fluctuations to property value decreases, the market has raised more than a few questions and concerns for buyers and sellers alike. I know the transactions I have represented have been busier than ever! One thing I’ve found is that consumers are keenly interested in the real estate trends we are all experiencing. So… I thought a quick review might be a great way for us to close out 2022.
Let’s start by tackling the one that affected us all in really big ways. Interest rates impact buyers and directly influence their ability to make big purchases. In turn, this affects sellers significantly. After all, if buyers can’t qualify for certain loans, they will either look for affordable housing or put their purchase plans on hold. This creates a slow in the market that has sellers seeing longer lead times to conclude their transactions.
According to a Freddie Mac survey, the real estate mortgage trend for 2022 is as follows:
30-year mortgages shot up by more than 2% between January and July! And we aren’t quite done yet.
- 22% – First week of January
- 67% – Last week of March
- 30% – Last week of July
Although rates are decreasing, and have been for the last few weeks, we are still seeing a 30-Year Mortgage rate of 6.33% as of 12/14/22. While the rates aren’t as high as they have been in US history, they certainly are much higher than the market has seen for the past several years.
The highest 30-Year rate was 18.63%, in October of 1981!
Let’s step away from the scary thought of an 18% interest rate and turn our attention to the next biggest trend in real estate, home pricing.
We checked in with DQYDJ.COM (Don’t Quit Your Day Job…) regarding historical home prices and learned that thirty years ago the median home price was just over $100K. Jump to August of 2006, and that price had more than doubled, reaching a high of $216.5K. Although the market did take a big dip from 2007 to 2012, we are currently seeing a median home price of $381.4K. Not too shabby!
Of course, affordability is another thing altogether. Just for fun, we looked into the median household income in the same timeframes as the median home prices we mentioned above and discovered that although median household income is increasing steadily, it is not keeping even pace with the increase in median home prices. Add that to the fluctuations in interest rates, and you start to paint a real estate market that is filled with concerns for both buyers and sellers alike.
|Timeframe||Median Home Price in thousands (US)||Median Household Income in thousands (US)|
So where does this all lead?
For the last part of 2022, we are seeing a slowdown. Fewer people are applying for mortgages and more deals are being cancelled. “Per Redfin data, 60,000 deals were called off nationally in September 2022, representing 17 percent of the homes that went under contract that month.” Sellers are really feeling the pressure as they do everything possible to see their transactions close successfully.
Based on our research and the data provided by Forbes, it appears that we can anticipate the following trends in the 2023 real estate market:
- Housing prices may decline by 2% to 5%
- Home sales are predicted to fall by about 16%
- Inventory will stay low as sellers decide to not list their homes
All of this may seem bleak, but always keep in mind that your geographical region and local market will dictate the trends you experience.
Keeping up with all of these trends and details is a big part of my job. My clients rely on me, as their attorney, to know what’s happening in the current market and anticipate how it will impact their specific transactions. It’s important to note that I rely on industry experts to keep me aware of the details. I partner with realtors, mortgage brokers, title companies, and others to keep me informed. It truly does take a village to ensure that you are protected and fully aware of what you are facing through your real estate deals.
As 2022 draws to a close and we look ahead to the new year, I’d like to take this moment to share my appreciation. Working with my clients and helping them successfully achieve their goals brings me the greatest joy and fulfillment.
Thank you for letting me be part of some of the biggest steps along your life’s journey.
Disclaimer: Please note that this blog is informational only and is not meant to provide legal advice. Each situation is different and requires informed care and decisions. Please seek guidance from a licensed attorney before proceeding with your transaction.