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This fall (2023), the overall housing market is (mostly) cooling down with the weather. According to NAR, pending sales declined in August to the lowest since 2020. The sales decreased 7.1% from July, and 18.7% from one year ago. Let’s look at why.
INTEREST RATES ARE INCREASING
Originally, interest rates were predicted to decrease this fall. However, the fixed mortgage interest rates have continued to climb. At the end of September, rates increased to 7.31%. This is the highest level since mid-December 2000.
High interest rates should not be the deciding factor to purchase a home or not. Interest rates naturally fluctuate and you may be able to refinance at a lower rate later. However, interest rates do affect monthly mortgage rates. They also impact a potential buyer’s affordability.
THERE IS LOW HOUSING INVENTORY
Another factor influencing the cooling down of the housing market is that there is low inventory. When interest rates are lower, there is more movement in the housing market. Lower interest rates increase the number of people buying and selling. However, the Wake County area experienced a hot housing market when interest rates were historically low. Now, many people who locked in at the lower rates are now hesitant to buy or sell. As a result, there are not as many options available to those seeking a new home.
THERE IS HIGH DEMAND IN THE HOUSING MARKET
One might assume that factors mentioned above would decrease demand. However, there is still high demand in the Wake County area. According to WRAL Tech Wire & the Wall Street Journal, Raleigh is the fifth best job market in the United States. With a booming employment sphere, people are moving from all over the United States to take new job opportunities and advance their careers. The growth in this area increases the demand for homes, regardless of interest rates and inventory.
WHAT DOES THAT MEAN FOR YOU?
CHANCE FOR APPRECIATION
This summary might seem a bit doom and gloom. Interest rates are high. Demand is high. Inventory is low. However, we do not want you to feel discouraged. Increased interest rates are meant to lower inflation and slow down economic activity to combat higher pricing. While this process is taking longer than expected, the intentions are to ultimately make the housing market more affordable and accessible. Even though prices and rates are higher, the high demand in this area increases the chance for appreciation. This means that even if you buy now, it is likely that your home will increase in value.
DROP IN MEDIAN PRICE PER SQUARE FOOT
A recent article from WRAL Tech Wire shows that home prices per square foot have dropped across the Triangle. While certain cities are more affordable, like Rolesville and Wake Forest, a drop in the median price per square foot makes buying a home more accessible to many. If you were on the fence about purchasing a property, this might be the nudge you are looking for.
A GOOD TIME TO SELL
If you are looking to sell, it is still a great time for you to do so. Locally, lower inventory and increased demand increase the possibility for a higher priced home sale. The Triangle area is one still experiencing a lot of growth, with a continual stream of homebuyers seeking an abode.
If you are looking for more advice or information about the fall 2023 housing market, the professional and experienced team at Oak & Main Real Estate Group would love to help. You can contact us at team@oakandmainnc.com or visit our website.
