Market Update - February 2023
Market Action Index - February 2023
Behind the lines of the real estate industry there’s a constant buzz about what’s on tap for 2023 (and 2024 for that matter), but out here on the front lines it’s very, very quiet…
Real estate is a game that almost all of us are either in or want to be in. It’s part of the ‘American Dream’ and it was reported recently that, “the typical net worth of homeowners is 40 times greater than that of renters” (Real Estate News). We all want the type of financial freedom that owning your primary residence can provide.
“The typical net worth of homeowners is 40 times greater than that of renters.”
Market Profile - February 2023
Right now we’ve got a straight up stand off between buyers and sellers. Who will jump first? Only those buyers and sellers that are confident (or are getting good real estate advice 😊) are pushing forward during this time. Most national media outlets are about 90 days behind in reporting. It takes months to receive the data and report on it. Naturally, the negative news stories are more lucrative. Fear drives clicks. If you don’t believe, watch the news sometime… there’s not a lot of ‘feel good’ being reported. This applies to the way they report on Real Estate as well. It moves the needle to report that a certain firm released a report that predicts a crash, than to report that the market is fairly stable, even trending upward at the moment.
To give you an idea, mortgage applications were up over 30% to start January before dipping last week. What does that mean? That means buyers are applying for loans. This isn’t the we ‘might start looking soon’ group. This is the group who has sent all of the paperwork to a mortgage broker who has submitted it for approval. Putting together this paperwork takes considerable effort. Trust me, if you’ve ever had to track down an address from 5 years ago or a tax form from years ago, you get it.
OK, so we’ve established that buyers are getting ready to making offers on homes. However, the biggest hurdle for most buyers is their fear (real or not) of the current interest rates. For some buyers, this legitimately prices them out of homes they’d like to buy. For others, they can’t quite swallow paying 6% interest when they still have the 3 percenters of 2021 whispering sweet nothings in their ears. I get it, who wants to pay more interest than they have to?? Not me.
30 Year Fixed Rate - February 6, 2023
Most buyers are hoping for interest rates AND home prices to come crashing down. Generally, these two operate inversely. If rates drop, home prices go up and vice versa. It makes sense if you think about it.
Sellers are in 1 of 2 boats (although some have one foot in both). Boat 1: they know what their home value was April of 2022 and can’t quite swallow the fact that they are potentially selling below the (all-time) peak value. Boat 2: Inventory is still so incredibly low that they don’t want to sell and have no place to go AND have to apply for a loan at today’s rates.
So the stand off continues… who will jump first? What will convince more sellers to put their homes on the market? My guess is that spring and summer will be busy. I believe we’ll have a rush as buyers start gobbling up the little inventory that’s out there, because they don’t want to risk trying to move during the fall (remember summer is optimal time to move for almost all families). Since inventory will start to drop, prices will come up and sellers will rush to the market. This is especially true if we continue to get good jobs and inflation reports. Depending on how many sellers list they could end up selling for less than they could right now. Only time will tell. As always please remember that this report is generalized and only meant to give you an overview.
If you’re considering buying or selling please call me and let’s talk about if it makes sense to do it sooner or later.
Don’t forget to buy your partner or loved one a Valentines Day card - have a great February!
P.S. I live on referrals (and will love you forever) if you send someone my way. It’s among the greatest compliments I can receive. I will treat them like family. Thank you in advance!
Brendan