Anyone contemplating selling, buying or investing in real estate knows that general economic forces have a significant influence on the real estate market. The recent and projected changes in the economy have, understandably, caused the market to shift again. Several indices are worth watching.
Days on Market – It’s taking about 20% longer to sell a house than just a few months ago. While inventory is still in short supply relative to demand, it’s important to note that demand has weakened. This is because interest rates have increased a bit and inflation has taken a bigger bite out of consumes’ disposable income. That means there are fewer buyers in the market across most price points.
Number of Offers per Listing – The latest data available from the National Association of Realtors shows that there have been 2.5 offers per listing compared to 5.5 offers per listing as recently as April 2022.
Inspections and Appraisal Contingencies - Only about 33% of the buyers are still willing to waive general home inspections or offer appraisal contingencies. This is slipped from about 40%. And when home inspections are written into an offer is “for information only.” Buyers are not asking sellers to make major repairs, or subtract money from their accepted offer. An appraisal contingency acknowledges that if the lender’s appraisal falls short of an accepted offer amount, the buyer is willing and able to make up the difference in cash.
First Time Home Buyers – Twenty-nine (29%) percent of the market is made up of persons that have not owned a home. This will continue to be a growing market because landlords are increasing rental rates as fast, or slightly ahead, of appreciating property sales prices.
House Price Index (HPI) year over year – The HPI, or price appreciation, was reported to be 16.2% for July ’22. That’s down from 18.3% in June, and it’s expected to be 15% for the month of September.
Existing Homes Sales – The National Association of Realtors (NAR) reports existing home sales is down 19.9% for the year.
Inflation & Recession – For the 12 months ending August 2022 the annual inflation rate was 8.3% according to the U.S. Labor Department. According to the generally accepted definition – 2 consecutive quarters of negative GNP – the U.S. economy entered a mild recession this summer.
Federal Reserve & Mortgage Interest Rates – It’s already all over the news that the Federal Reserve increased the Fed Funds Rate 75 basis points on September 21st – 3rd consecutive increase this year. Experts believe that another increase of a total of 125 basis points will be announced on November 21-22, and December 13-14. A basis point, remember, is one hundredth of one percent. So, to make the math simple, 50 bases points translates to .5%. But what really drives interest rates is their inverse relationship to the yield on Treasury Certificates.
The yield on Treasure Certificates has long been recognized as the “safest” investment an investor can make. The second safest investment is real estate and the general rate of appreciation in price. For a more detailed explanation call Matt Sheffey (440-668-2942) at Keller Mortgage. Be sure to ask him about Keller Mortgage’s “Zero Plus” Mortgage Program…tell him Dave George suggested you call. This exclusive program can help you sell your home faster at a greater “Seller Net” or save you money if you’re in the market to buy.
Watch for further updates and blogs on my website: www.welistandsellhomes.com
This is Sara, we worked with her family for almost 5 years to find her the right home. As Realtor's WE are in this for the LONG HAUL!
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David and Tina
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