You’ve read the news, the housing market is in a decline. But is it really?
We’ve researched national and local housing data and the results may surprise you!
- Sales are down 19.2% year over year
- Median sale price rose 11.3%
- Inventory supply dropped to 3 months (6 months is healthy)
- Sales are down 5.9%
- Days on market dropped by 3 more days
- Interest rates are double from 1 year ago
- Median sales price in ’22 was $403,800 up from $366,900 in ’21, and $286,800
- Housing affordability index declined
- ’22 5
- ’21 1
- ’20 1
- (The housing market index looks at median price, interest rates, PMI, and median income, the higher the number the more affordable the housing)
- New Home Sales declined 12.6%
- Construction is down 29% below projections
- Estimated permits for 2022 is 916,000
- Lumber prices have declined since February. It was $1400 per thousand in February and is now $503 per thousand.
- Single family permits declined 5.9%
What does this all mean?
Sales are down, but inventory levels are still historically low. When you factor in the huge gain in median sales price, you can see that the housing market is still performing very well. There is a lack of supply more than lack of demand slowing down the sales.
While that is a positive, we are seeing pricing rise the most in the lower price point of $400,000 and under. There is clearly a lack of supply of starter and first-time buyer homes on the market. Since new construction cannot fill the inventory in those segments, those properties continue to sell rapidly.
Another interesting point from the data shows that sales in rural areas have declined, but sales in urban areas have increased. This is due to the higher fuel costs, pushing people to re-locate closer to town to reduce travel costs.
As far as new construction with lower lumber costs, it is a great time to re-consider building. Between the interest rates dropping nearly 1 point from July, the average customer will save nearly $40,000 on a $400,000 loan just from the interest rate drop. Add in the savings from the lumber drop and you have another $10,000-$15,000 in reduction, making it a much more favorable environment for building than that of 60 days ago.
Lastly, if you have owned a home for more than 3 years there is a tremendous amount of equity in your home that you can capitalize on. While you may not get as much as you would have if you sold in January of 2022, you would still cash in a ton of gains just by selling your home!
If you would like more information about the market and think building a home may be the best option for you, we would be glad to help you assess your situation!