So, what's next?
Early this year, and honestly for the last couple of years, we were experiencing an extremely competitive real estate market. Multiple offers with 10+ offers on the table with par for the course, buyers waiving their contingencies were commonplace, and listings were selling for far above the listed price.
At the same time we were witnessing rampant inflation on every day items. So, the Federal Reserve intervened with the only tool they had, raising the short term interest rate. Now, this is something we’ve seen before. When inflation takes off, the Fed raises the rate. We have been here before, we will be here again. This is part of the cycle of the economy.
Once this happened, the ripple effect to mortgage rates sunk in, and buyer’s purchasing power was directly affected. We’ve noticed a decline in median sale price since the increase, we’ve also noticed more creative offers with better protections for buyers and even credits in some instances.
Now, there isn’t a fire sale going on, we still have relatively low inventory, meaning more buyers than homes, however we still are noticing longer days on market and some listings that just are not selling. However, while there may be a slight decline in median sale price since the inflated numbers we were seeing previously, when you look at the overall picture, values are still incredibly high, with over 18% appreciation from last year alone.
So, what’s to come? Experts are saying 2023 will bring us a recession. What happens to interest rates in a recession? Well, historically they tend to fall. The Fed is set to meet in December and late January, and it is likely there will be another increase. There was a recent dramatic drop in interest rates which was a welcomed unexpected change. With inflation beginning to change, perhaps there will be more relaxation, but only time will tell.
This year has been quite a ride, and it’s not over yet!
Kaelin Wagnermarsh
Realtor® DRE 01945819
eXp Realty of CA
831-419-6538
kaelin@kaelinrealestate.com