In 2020-2021, the housing market was booming. Prices were high, and homes were selling within hours, not weeks. Over the last several months, the Federal Reserve has increased interest rates to slow inflation and reduce prices. How well has that worked? To start, homes aren’t selling within minutes, but we need to take a look at the prices. Has there been a significant decrease in prices?
According to Redfin U.S. housing market overview, the median sale price for U.S. homes is up from just over $350k in March 2021, to about $425k in March 2024. Meanwhile, the federal interest rate was at 0.25% in March of 2021, while it’s been raised to 5.5% in the first quarter of 2024. Getting into a new home is significantly harder than 3 years ago. While homes aren’t flying off the market the way they were a few years ago (which may fortunately lead to fewer bidding wars), homes are more expensive, and interest rates are higher.
Families that are looking to downsize are in a difficult situation. A downsize is difficult for many families, as they would likely have to cut hundreds of thousands in home prices to make any significant impact. At the same time, those looking to expand their portfolios and invest in real estate, are in a difficult position as well. There is some hope for sellers with high salaries and strong wealth looking to upgrade their homes. while sellers with deep pockets will still need to pay a premium, they can afford an increase in a mortgage, while making a profit on their home and afford to upgrade to a larger, more expensive home.
There may be too much uncertainty to wait to buy, but buyers are in a difficult spot, but the shopper’s buying power may be stronger than it was a few years ago (home sales are down almost 10% in the last year). Buyers and sellers alike need to be aware of the current market conditions. The current market housing situation isn’t so dire that there is no hope, but there may need to be some patience and strong planning when considering buying or selling a home. If you’re looking to purchase a home, we recommend that you take the time you need to properly plan, and ensure that you’re in a quality position to purchase. Using a mortgage calculator can be a quality asset in this process, as well as having a strong understanding of your budget. We recommend making sure that you’re as well-informed as possible, which includes having access to several sources of news, mortgage calculators, and quality personal research. Use the resources below to help through the buying or selling process if you’re interested in getting into/back into the market.
Resources
Redfin.com U.S. housing market overview
U.s.news.com. Should you wait for mortgage rates to fall to buy a house?
