Second Quarter Market Update

Despite expectations, we continue to see growth in our market. We’ve had both an increase in our average sale price year over year and quarter over quarter. In terms of the volume of our sales, we’ve seen more than we did for the first quarter of this year, but less than the second quarter of last year. Just like our volume of sales, we had fewer days on market for this quarter than last, but more than this time last year. Last, our sale price is about 97% of our list price. The trend continues as that is higher than last quarter, but less than this time last year.

Putting this in context, this means our marketplace has a strong resilience in the climate of rising interest rates. A couple of variables that might be contributing to this are low inventory and the hope or expectation that these current rates are not here forever.

One of the hypothesized side effects of the Federal Reserve increasing interest rates was to reduce or discourage real estate transactions. There was significant concern that this may cause some sort of recession part two or generally bad news for real estate pricing. However, this has not been the case. One of the unforeseen consequences has been that homeowners have been discouraged to sell their homes to trade a low interest rate mortgage for a higher interest rate mortgage. The side effect that we’ve seen locally regarding higher interest rates has been fewer sellers. As a result, we have had a restricted supply of inventory that has nearly kept pace with the reduced demand as a result of higher interest rates. Our market has been resilience in the face of rising interest rates.

The other piece of the puzzle that appears to be assisting or supporting the overall optimism within our market has been the expectation that interest rates will not stay this high. There are a couple of reasons why. First, the Federal Reserve has been noting that cuts may be in the future, but they first want to tackle inflation. As our inflation continues to come down, the Federal Reserve may determine that rate cuts would be appropriate or justified to sustain their target rate of 2% inflation. Second, when speaking to lenders, they mention that when the 10 year treasury was at these current rates, mortgage rates were closer to 5% than 7%. The combination of the Federal Reserve foreshadowing a future rate cut and the 10 year treasury supporting mortgage rates closer to 5% has been a very optimistic indicator that mortgages at these current rates have a sunset period.

As long as supply and demand move in correlation with one another, we continue to expect a generally optimistic market locally. It can be tough to not listen to the white noise of the news when our market isn’t matching the national narrative. This is why it is important to work with a local expert to help you navigate your local market. For help in navigating this market, contact me today.