New Year, Market Changes

It’s the beginning of a new year!! Time to look at how our market has changed over the course of the year.

Rates

Yes the fed has dropped the federal funds rate. However, according to Mortgage News Daily , mortgage rates haven’t progressively decreased. As of right now, the expectation is for two more fed rate cuts. This doesn’t directly correlate to lower mortgage rates. At a minimum, the hope is for mortgage rates to not increase.

Rent growth opportunity for first half of 2025

Because inflation has still been relatively high, most landlords will be able to increase rents by 8.9% until July 31, 2025. The general rule of thumb is 5% plus CPI with a cap of 10%. This doesn’t mean that all rents are up by 8.9%. Given that CPI is likely to come down with the Fed’s effort to combat inflation, there might not be opportunity to charge rent at an increase of 8.9%. It is probably most applicable for long term tenants who are currently under market.

Year over Year changes in Sales Price

Over the course of the past year, our average sale price slumped by nearly 20%. This is a good reflection of lower rates having a strong impact on the market. Higher rates mitigate affordability for buyers and reduce purchasing power. As rates drop/level off, it’ll be valuable to compare rates against sales prices.

Affordability

Affordability has improved by about 14%. Although mortgage rates are currently a little higher than they were this time last year, purchasing a home is now a little easier for current buyers for home prices that have softened. If rates or prices come down, this will continue to improve affordability.

Inventory

Inventory ticked up by about 11%. This seems to support the picture of pricing coming down. With more inventory, there is less competition for buyers and greater opportunity to negotiate.

Year over year volume of sales

On the other hand, we had a nearly 10% increase in the volume of sales. Deals got done. Buyers could negotiate. This also seems to support the idea that we aren’t crashing. Demand is still strong. However, it is muted with lower affordability in contrast to. years past.

List price versus Sale Price

Ultimately, this ratio didn’t change. Sellers met the market.

Year over year changes in days on market

Average days on market came down. Demand is still relatively strong.