Home Sales Fell Sharply This Past December—But Why?

Home sales have dropped significantly of late.
Here’s what I think is behind the trend.

Want to Buy a Home? Search All Homes
Want to Sell a Home? Get a Home Value Report

This past December, home sales plunged across the country. In fact, they are down a staggering 6.4%. However, it's not clear why.

The economy is doing well. During that same December, 312,000 jobs were created across the country and age gains are accelerating while labor-force participation is increasing. Mortgage rates, while higher than a few years ago, are still at historic lows. 

When looking at the economy and mortgage rates together, the current housing market is more favorable than it was back in the year 2000—yet sales are lower than they were back then.

It's unlikely that one-off news events are to blame. For example, recent stock market volatility and the government shutdown both occurred after the drop in home sales was already underway. So what could possibly be going on?

My suspicion is that it's a reflection of declining consumer confidence. In some areas of the country, home prices, which have increased for years, are finally falling. Naturally, this affects potential buyers negatively. Nobody wants to buy a home and have it decrease in value immediately.

“

My suspicion is that it’s a reflection of declining consumer confidence.

”

 

These nationwide trends have yet to hit the Baxter market. Home prices are still trending upward and demand remains high.

If you were to list your home now, it’s likely you'd be able to sell quickly and for top dollar. In fact, now might be a particularly favorable moment, considering the significant drop in mortgage rates in the past two months.

The thing is, this situation won't last forever. Eventually, the same kinds of trends we are seeing across the country will catch up with us around Baxter as well.

That's why it makes sense to act now.

If you have any questions for me, whether you are looking to buy or sell, give me a call or send me an email today. I'm here to help!

Learn Insider Secrets on How to Sell For Top Dollar

We hope you’ll join us for our upcoming Sellers’ Workshop!

Want to Buy a Home? Search All Homes
Want to Sell a Home? Get a Home Value Report

Our 1st Annual Sellers’ Workshop is just around the corner, and you’re invited. At this great event, we’re going to pull back the curtain and share some insider tips on how to sell your home for top dollar in today’s market. The workshop will take place on Thursday, February 7 from 6:30 p.m. to 7:15 p.m. at the Country Inn and Suites in Baxter. You can click here to RSVP. We look forward to seeing you there!

What Does the Direction of Home Prices Mean for You?

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.

Want to Buy a Home? Search All Homes
Want to Sell a Home? Get a Home Value Report

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.

“

Home price growth is slowing, and home prices might eventually start to decrease.

”

 

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.