The rate of appreciation for home prices has been slowing, and today we’d like to shed some light on why this is happening and what it means.
We seem to be entering a buyer's market.
I'll explain what this means for you in just a second.
But first, let me give you a quick rundown of current real estate conditions:
1. Prices at all-time highs
For the past several years, home prices grew at twice the rate of inflation and faster than incomes. Not surprisingly, we are now at record price levels. However, price growth has definitely been slowing over the past several months. And we're even seeing some softness in the market, with an increasing number of price cuts.
2. Mortgage rates rising
The current 30-year fixed mortgage rate stands at 4.63%. That's almost a 1% increase over just a year ago and the highest level we've seen since 2011.
3. Dropping affordability and demand
Combined with current high prices, the rise in mortgage rates is causing a decrease in affordability. Earlier in the year, affordability was estimated to be at a 10-year low. Not surprisingly, this is having an effect on demand, with mortgage applications down 16% over last year.
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Home price growth is slowing, and home prices might eventually start to decrease.
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Like I said at the start, this seems to be part of a fundamental shift in the market. Home price growth is slowing, and home prices might eventually start to decrease. Mortgage rates are expected to continue to grow. And if that happens, we will slowly but surely enter a market where buyers, not sellers, have the final say.
So what does this mean for you?
Well, if you're looking to sell, it means the time to act is now. Around Brainerd, I still see a lot of demand for homes. However, over the next several months, you’ll likely see an increase in inventory as the snowbirds come back and put their homes on the market. It’s also likely that national trends will catch up with us here as well. The good news is, you have an opportunity to act before this happens.
If you decide to list your home this winter, you might benefit from the current high prices as well as the solid demand around Brainerd. In other words, you could sell quickly and for top value.
If you’re considering selling your home, don’t hesitate to reach out to us so we can give you a free home evaluation. If you are ready to get the process rolling immediately, give me a call. I'm here to help.
