Rising Tide: Real Estate Market Amidst Rate Hikes
Topic: Buyer And Seller Resources, Buyers, Recent, Rural Living Blog, Uncategorized
In recent news, the Federal Reserve delivered on its promise with another substantial 0.75 basis points rate hike. While this move was largely anticipated and already factored into mortgage interest rates, it's undeniable that rates are on an upward trajectory. In the midst of this economic uncertainty, it's natural for anxiety to surface. However, it's crucial to strike a balance between staying informed and not succumbing to fear or inaction in the face of challenging news. Additionally, it's vital to maintain perspective, particularly when evaluating national market trends, as understanding the local real estate landscape is as essential as checking your local weather forecast.
The Local Market's Resilience
Our local real estate market has indeed felt the impact of the numerous Fed rate hikes and seasonal fluctuations, but it has not come to a standstill. Looking back at historical data can provide valuable insights into our current market's trajectory.
• During the worst of the Great Recession, hundreds of homes were still selling monthly in Boulder (and Larimer) counties. While sales volumes decreased, they did not plummet as one might assume. A look at the monthly statistics from 2008-2009 on the MLS can be an eye-opener, and the prices during that period may surprise you.
• Although showings have significantly decreased compared to this time last year, the number of showings per listing is actually better than what we experienced during the same season in 2018 and 2019. Selling a listing at the moment requires patience; it won't move as swiftly as it would in the spring.
• List to Sale Price in Boulder County in October 2022 has returned to a normal 97%. The 102-105% average during the peak of the last two years was neither healthy nor sustainable. As we approach the holidays and slower winter months, it's normal for list/sale prices to dip seasonally. Realistic pricing is paramount at this juncture, as overpriced homes tend to linger on the market.
• Days on Market (DOM) to sell a home in October 2022 was slightly better than in October 2018 or 2019, with an average DOM of 40. This figure is expected to rise in the coming months, as it typically does leading up to spring, regardless of economic conditions.
• Currently, we have a two-month supply of inventory to meet demand. This does not constitute a Buyer's market; a balanced market is commonly defined as having a six-month supply of inventory. Boulder County has never been that balanced. In 2019, our supply was slightly over three months. It would take significantly more inventory for a true buyer's market to emerge. However, since May 2022, leverage has increasingly shifted towards buyers.
Seasoned Insights in Unpredictable Times
Veterans of the real estate industry have weathered numerous cycles, riding the highs and lows of the market rollercoaster. It's expected that conditions may worsen slightly in the coming months before improving, but real estate transactions will continue to occur daily.
Despite the headlines and economic uncertainties, many real estate professionals remain as busy as ever this time of year. It's a time to buckle up, work a little harder, and leverage creativity to help clients meet their goals. Realtors are writing offers, attending listing appointments, working with buyers (including those involved in 1031 exchanges), and connecting clients with skilled brokers nationwide.
While the challenges may be considerable, the real estate industry continues to power forward, one client at a time, as it has always done.