Each month, we are posting an updated Market Outlook based on the questions we continue to receive from clients, employees, and investors about the implications for the housing and mortgage markets in which we are active (read September’s Outlook here).
Another month, another seller’s market. It seems that nothing will budge this seller’s market. Nationally, the median home price is up 14% (source: Redfin) year over year. So even rapidly increasing home prices are seemingly having no effect on inventories, nor are they hurting demand.
Housing
Inventories in our markets continue to hold at new lows. We’re holding at around 1.3 months of inventory in Greater Philadelphia, ticked down to 0.9 months of inventory in Greater Baltimore and 0.8 months of inventory in Greater Washington, DC. In Greater Orlando, the Orlando Regional Realtor Association is currently reporting: “lack of inventory — not lack of buyer activity, as you would expect — is clearly shaping up to be the concerning result of the COVID-19 pandemic. In fact, the availability of single-family properties within our most in-demand price ranges of $160,000 to $400,000 is startling; less than a single month of supply.”
If you own a home in any of these markets and you are thinking about selling, it’s still as good a time as we’ve ever seen — and there’s not much more room for improvement. We may hold at these levels but the seller’s market and price appreciation fundamentally can’t get much stronger than we’ve seen so far this year.
Mortgage
If there is any headwind at all, mortgage rates are starting to rise and the average 30-year fixed rate mortgage is now once again priced just above 3%. This may calm down some of the price appreciation we’ve seen in the housing market, but it won’t likely unlock much inventory since interest rates are still historically low even at their current level.
If you’re planning to sell and also need to buy, now is also a good time to do so because you have two out of three major factors working in your favor: a strong seller’s market and low interest rates. The one factor working against you is that it’s tough to be a buyer in this hyper-competitive market, but it’s better than the alternative scenario of having a home to sell that you can’t unload blocking you from purchasing your next home. Though more difficult, it is still possible to find quality homes in a low inventory market.
