Market Report

2022 has been a wild ride for the real estate market. Back in January rates for an average 30 yr fixed mortgage were at 3.22% according to Freddie Mac’s Primary Mortgage Market Survey. They started climbing from there to mid 4% range in the spring, mid 5% range in June and after a short drop and another sharp rise we are now sitting at around 7.25% for a 30 yr fixed mortgage. That more than doubling of the rates had a dramatic effect on the real estate market. At the start of the year Moscow was experiencing an even lower than typical inventory resulting in a slow start to the year for home sales. This was not due to any decline in the market but rather to the lack of homes available. In January demand was super high with well qualified buyers eager to get into a home and lock in those low interest rates in anticipation of them rising to combat inflation (although not many anticipated rates rising so quickly as they did). This supply/demand imbalance predictably led to rapid price appreciation as those buyers competed for the few available homes. We saw average residential sold prices in Moscow go from the mid $300k range in January all the way up to the peak of high $400k range in August before dropping quickly back down to below $400k in November. Residential sales volume followed similar trends peaking in June and now is even lower than during the ultra low inventory environment of January. That drop in sales volume is a trend we are seeing nationwide as both real estate sales and mortgage volume are reaching near record lows. Many buyers have paused their home search as they saw their buying power shrink and are sitting on the sidelines waiting to see what happens with rates and the housing market as we move into a new year. This reduced demand has not, however, translated into much of an increase of the supply side. Sellers are unmotivated to move while locked in to low fixed rates. What we are seeing now is a reduction in both supply and demand slowing the overall activity. With the market entering this state closer to equilibrium it is bringing back price reductions, longer time on-market, and buyer friendly negotiations. What we have yet to see is any really significant decline in home prices year over year. However, if the mortgage rates continue to rise and unemployment climbs then price declines will likely continue into 2023. If you are a buyer who is on the fence, one thing to keep in mind is that those rising rates that bring prices down will likely still have the result of higher overall monthly payments. So my recommendation to both buyers and sellers remains the same as always: think about your situation and examine your goals. Do you need a larger home or need to move for a job? Don’t over analyze the market or try to time it perfectly. Consult your trusted advisors and take the leap. There are always opportunities so get in touch with your agent and let us be your guide.
-MIKE CHURCH