01/10/2024
Here's a snippet from my 2023 year in review market update. If you want to see the entire update click the link below!
If you had to describe the 2023 real estate market in one word, that word would be: frozen. With mortgage rates hanging around 7% for the majority of the year, affordability, buying power, and buyer demand all took a massive hit. At the same time, homeowners were not selling because nobody wanted to trade in their 3% mortgage for a 7%. All of this led to one of the most stagnant real estate markets we’ve seen in years.
The biggest difference in the 2023 market compared to 2022 was not a dip in home values, but rather a dip in the total number of transactions. 2023 saw the fewest real estate transactions since the 2008 Great Recession and yet home prices held steady due to low inventory. Something else that I personally noticed was homes that sold in 2023 sold for about the same price as they would have a year ago (for the most part)...the biggest difference however is that there were many homes sitting on the market that would have no doubt sold quickly just a year and a half ago. December, however, brought a good amount of action to the market as The Fed came out and said they will be cutting rates throughout 2024. The mortgage market of course responded…Mortgage rates saw one of the biggest 2-day drops in decades. The average 30-year fixed rate dropped 0.5% during those two days. With that, the average lender is now closer to the 6.5% range (I’m even seeing scenarios now where some borrowers are able to get down into the 5’s via rate buy downs and/or FHA and VA loans). Since this rate drop, we are already seeing a serious uptick in buyer demand via mortgage applications.
With all of this in mind (as well as the data below), my current advice for buyers is as follows: if you are hoping to buy something sometime in the next 3 years, if you can buy something right now that you can reasonably afford without banking on a refinance in the future, do it now rather than wait! As you will see in my 2024 prediction below, every sign is pointing to interest rates continuing to drop in 2024. If rates more than doubled over the past 18 months and prices still didn’t decrease, what do you think will happen to prices when rates drop?
On the other side of things, my current advice for sellers is that you need to be as reasonable and objective about your home's value as possible. You can no longer just price your home 5-10% higher than the best comp and get multiple offers like you could in 2021. In this current market it is really important to get your pricing right. On that same note, be weary of agents that just tell you what you want to hear. Working with an agent like that will no doubt backfire. You want to work with somebody who will give you an objective and honest opinion on your home’s value.
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