April 2022 General Market Update

General Market Update

There is a lot of negative news out there about real estate. Yes, interest rates are moving up. Yes, prices are going up. Yes, there are typically multiple offers over asking price on homes. AND people are still buying and selling real estate every single day. You can view our market update video here.

Are we in a housing bubble?

This is one of the most commonly asked questions we get. We do not think we are in a bubble. Many of the reasons and arguments we have made in previous newsletters that support this statement were recently quoted in a Forbes article. Some of the best points from the article include:

• - Millennial demand for housing is up with Gen Z trailing right behind. Americans who are millennial aged or younger total 166 million. First time home buyers make up 31% of all purchasers. Gen Z will be reaching the age of 30 within the next decade, meaning demand for homes will be high or higher than it is now.
• - Supply can’t keep up with demand. It will take several years to balance out the market from the lack of homes built over the last decade.
• - Borrowers are less likely to default on their mortgages. 67% of mortgages originated for buyers in Q4 of 2021 had 760+ credit scores. This means that people buying homes today are less likely to end up in foreclosure.

What is going on with interest rates?

Let’s face it. Interest rates are going up and people aren’t happy. If you were getting a $500,000 loan with a 2.875% mortgage a few months ago that payment would be $2,074.46 and with the same loan at a new rate of 5% the payment would be $2,684.11. That is $600 more per month for the same loan. Ouch! It definitely will make buying a home more expensive. However, all of the cheap debt out there has been one of the main reasons housing prices have been climbing so rapidly. Debt is cheap. The thought most buyers have is, who cares if you have to go $50,000 over asking if it only is costing you $210/month extra over 30 years at 3%?

The fact that rates are going up could actually be a good thing for the overall housing market. It could help dampen the red hot market we have been in for so long. People might be paying more attention to what their debt payments are actually going to cost them. However, just because rates are going up does not mean prices are going down.

As you can see, throughout history there have been periods of rising interest rates and real estate prices did not come tumbling down. They continued to climb, albeit at moderate rates most of the time.

Why is April the best time to list your house for sale?

According to Zillow trends, the second half of April is the best time to list a house for sale. Homes sell for about 2.8% or more during this time period. In our market with the median price of a home, that would be a difference of $23,240.

This research also revealed that the best time to go Active with a house is on a Thursday. This is a strategy that our team implements as well. The reason for this is that when you list on a Thursday, it takes a day or so for it to hit all of the websites. This gives the home buyers out there the time to see it, schedule a weekend showing, do an awesome open house, and get the ball rolling!