Houwzer's Market Outlook is 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.
Back in a previous rendition of our Market Outlook, we asked: could May 2022 Have been the market top for housing?
It looks like we might have missed the call by one month.
Home Appreciation is Finally Waning
We saw some price increases continue into June from May (possibly due to properties that went under contract before mortgage interest rates really started to spike this spring), but at this point it looks like year-over-year price appreciation is waning. After accounting for inflation, our Mid-Atlantic markets prices have declined year-over-year.
Florida home prices are still way up year over year (well above inflation), but we’re also seeing the most significant inventory increases in those markets, suggesting that we might actually see the market move toward a more balanced market more quickly in those markets.
We’ve now seen steady declines in the number of homes going under contract year-over-year in consecutive months in all markets, paired with corresponding increases in inventory.
While inventory is continuing to build rapidly, it should be noted that that inventory is still firmly in Seller’s Market territory. However, by the end of the year we could start to approach a more balanced market condition if inventory growth continues at the current level.
Mortgage Rates:
Mortgage rates have continued to tick down from their June highs to an average of 5.33% for a 30-year fixed mortgage. This may create a bit of a window for buyers this fall, as mortgage rates are declining, and home price appreciation is slowing and in some cases failing to beat inflation year-over-year. July’s flat inflation data also suggests that mortgage rates could continue to come down as we enter the fall market.
It’s too soon to say whether this will have a calming effect on the inventory increases we’ve been seeing and keep us in a Seller’s market or not, but it is a possibility if the Fed’s actions successfully tamed the inflation we’ve been experiencing this year.
If buying a home in this market seems intimidating, we don’t blame you. There is still much macroeconomic uncertainty and homes are much less affordable than they were for the last decade or so.
Rental Prices:
However, looking over the fence at the rental market’s accelerating rent growth suggests that would-be buyers that are passing on the for-sale market are now having a significant effect on residential rent prices.
As we emphasized last month, there still aren’t enough homes in the areas that buyers and renters want to live and housing as a whole likely will continue to become less affordable over the longterm unless we see much more construction activity (rental and for sale) than we are seeing now, and sustained over a longer period than we’ve seen recently.
For the long term, it’s probably worth it to seize this window of historically not-that-bad mortgage rates if your goal is to become or remain a homeowner.
Philadelphia Market
- Median Home Price: $355,000 (up 6.77% from July 2021)
- Average Sales Price to Original Price: 101.03% (vs. 100.79% in July 2021)
- Average Days on Market: 23 (vs. 22 in July 2021)
- Month’s Supply of Inventory: 1.8 months (+5.7% vs. July 2021)
- Homes Under Contract: 5457 (down -14.79% vs. July 2021)
DC/Baltimore Market
- Median Home Price: $570,000 (up 3.64% from July 2021)
- Average Sales Price to Original Price: 99.46% (vs. 101.22% in July 2021)
- Average Days on Market: 20 (vs. 17 in July 2021)
- Month’s Supply of Inventory: 1.6 months (up 23% from 1.3 in July 2021)
- Homes Under Contract: 5390 (down -26.68% vs. July 2021)
Orlando Market
- Median Home Price: $400,000 (up 16.96% from July 2021)
- Average Sales Price to Original Price: 97.93% (vs. 99.26% in July 2021)
- Average Days on Market: 18 (vs. 16 in July 2021)
- Month’s Supply of Inventory: 1.8 months (up 50% from 1.2 in July 2021)
- Homes Under Contract: 2399 (down -18.62% vs. July 2021)
Tampa Market
- Median Home Price: $375,000 (up 23.43% from July 2021)
- Average Sales Price to Original Price: 97.7433% (vs. 99.31% in July 2021)
- Average Days on Market: 20 (vs. 14 in July 2021)
- Month’s Supply of Inventory: 1.9 months (up from 73% from 1.1 in July 2021)
- Homes Under Contract: 5241 (down -11.78% vs. July 2021)
Jacksonville Market
- Median Home Price: $375,318 (up 21.07% from July 2021)
- Average Sales Price to Original Price: 98.33% (vs. 99.82% in July 2021)
- Average Days on Market: 38 (vs. 29 in July 2021)
- Month’s Supply of Inventory: 2.2 months (up 46.67% from 1.5 in July 2021)
- Homes Under Contract: 2756 (down -21.32% vs. July 2021)
Is it a Good Time to Buy a House?
If out-of-control price appreciation has been keeping you away from the housing market, now might be the right time to dip your toe in.
It's not the best time ever to buy a home - inventory is still low, mortgage rates have risen from their historic lows, and sellers still have the upper hand.
However, rental prices have continued to rise, and home building has yet to catch up to market demand, so there is no real way to avoid the rising cost of housing going forward. At least when you buy a home, you get to lock in a mortgage payment you can afford - and start building your equity, rather than your landlord's.
Is it a Good Time to Sell a House?
It's a good time to sell a house because waiting is unlikely to reveal better conditions. To fully maximize your profits, it helps to have a low inventory, high demand environment. This increases the likelihood that multiple people are bidding on your home because they have few other options.
Although the market has been shifting, it's still overall a seller's market - inventory is low, and mortgage rates are still historically reasonable. But any of these things could change by the end of the year, and put more power in the hands of buyers.
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