Where the market is now and where it’s headed in the future.
Over and over, people have been asking me about what’s happening in the market. Where have we been, and where are we headed in the future? Today I’ll address a few points that will help answer these questions.
The average interest rate was 3.17% on December 27, 2021, which was extremely low. At the same time, the supply of homes in Orange County was the lowest it had been since 2004—there were only 996 homes available on the market.
Today interest rates have risen to 4.55%. Historically speaking, that’s still an incredibly low rate, but in reality, we’re beginning to see how rising rates are affecting the market. For one, rising rates have eroded buyers’ purchasing power by around 39%. That means a home today is almost 40% more expensive than a house at the same price a year ago.
In our current market, there are 1,526 properties available for purchase. That’s a big jump from the 996 we had last year in December, but it’s also a 40% decrease compared to how many homes were for sale in March 2021. Desirable homes are still getting offers, but the number of overall offers has decreased.
“We believe that the market will begin to normalize as time goes on.”
As a team that handles both listings and purchases, we’re noticing that the demand for homes is slightly lower than it once was, and that includes the lower price points around $500,000. That’s in part because home prices have increased quite a bit over the last couple of years and also because the cost of borrowing money has increased.
We’re still in an aggressive seller’s market, but as we move forward, there will be more opportunities for buyers who are looking to move up or down. If you’re thinking about buying, keep in mind that it’s nearly impossible for buyers to get a contingent offer accepted, so removing contingencies may become a necessity.
All of these points factor into buyers’ budgeting decisions this year. We believe that the market will begin to normalize as time goes on, so it’s not all doom and gloom. More offers are being accepted with slightly lower down payments than last year; between 25% and 40% of the offers received at that time were cash.
If you have any questions about what’s going on in the market or you’re interested in buying or selling a home, don’t hesitate to call or email us. We’re happy to help.
