Welcome to Market Talk!
I’m Liz Moore, President of Liz Moore & Associates, and today we’re going to talk about what’s happening in our local real estate markets as we move into the second half of 2024.
2023 ended the year with the lowest number of home sales since 2008. That low was the combination of two competing forces – high interest rates and low inventory. As interest rates jumped in the second half of the year, more and more buyers decided to wait it out.
2024 has continued to see a relatively flat pace of sales, although there are definitely pockets of intense competition (multiple offers) in certain neighborhoods and price ranges. Prices have remained strong as a result of continued low inventory.
Good News!
The good news is that interest rates have finally settled down and stabilized. And, while they’re not the 3% rates we enjoyed during the pandemic years, they are definitely doable – especially compared to the peak last year near 8%.
Buyers are dipping their toes back in the market, comfortable that the rate environment will hold steady, at least through the remainder of this year. Many industry watchdogs are predicting a rate drop either in September or December.
More Good News!
Inventory is finally beginning to build. Our local market place has seen steady (if small) gains in active inventory available on the market for the past 6 months. Like the buyers, sellers who have put their moves on hold during the pandemic years (largely because they are addicted to their existing low interest rates) are finally realizing that life has moved on, and it’s time to move.
During the past 2 years there have been almost 3 million marriages and 1.5 million divorces, 7 million babies born, and 7 million boomers turned 75, which translates to time to downsize. There were also 50 million job changes, and lots of flexibility as a result of new remote working opportunities.
Not only do life events trigger moving opportunities, but sellers are also recognizing that they have had tremendous equity gains
over the past 4 years.
Sellers are realizing that their homes may never be worth more than they are right now, and that 2024 may be the ideal time
to tap into their equity. Because of extremely strong price appreciation during the pandemic years, most homeowners have record high market values, and accordingly significantly more equity than they did pre-pandemic. Nearly 70% of homes are completely paid for, with the owners having no mortgage at all, or have at least 50% equity.
This record high equity creates an opportunity for sellers to trade up and use their additional cash to either put down a larger down payment to offset interest rates, or to pay off other consumer debt that is carrying a higher interest rate. Either way, overall monthly expenses can actually drop, despite the fact that mortgage rates will be higher on the new house.
Do Local Tax Assessments Mirror Market Value?
We have fielded dozens of phone calls over the past few months as clients have received notices of increases in their local tax
assessments. In some cases, we’ve seen values increase 40% or more over the past 2 years.
While that may seem like a lot, in many cases it simply reflects the assessor’s office catching up with home price appreciation since the pandemic. And, while it’s not a happy result for your pocketbook when it comes to paying property taxes, it’s definitely a positive indication of the increase in your home’s value.
Is the assessment an accurate reflection of market value? That’s hard to say without doing a market analysis for you. Like Zillow zestimates, tax assessments are based on a variety of algorithms that don’t take into consideration a number of human factors that are necessary to accurately predict your home’s true value.
We would love to provide you with a complimentary market analysis, as well as bring you up to date on all that’s happening in
the local market.
What Does the Recent NAR Settlement Mean for Local Consumers?
Many of you have called to ask what impact the recent National Association of REALTORS settlement in the class action commissions lawsuit will have on our local market.
While the settlement won’t receive a final approval by the courts until November, we are already seeing practice changes in our local markets as it relates to Sellers offering compensation to Buyer Agents. Our local MLS’s are in the process of removing buyer agent commission fields in anticipation of the outcome.
Real estate commissions have always been negotiable, and that will continue. As a consumer, you should hire your agent based on the value that they bring to the transaction on your behalf.
We Love to Talk Real Estate.
Questions? Whether it’s about your home’s value, whether or not it may be a good time for you to move or invest, or if you’re
just curious about what’s happening locally or nationally, give us a call today!