Monthly Market Update
The U.S. median home sale price surged 7% during a four week period last month, the largest month-over-month increase in over five years. While mortgage rates are soaring at the fastest pace in history, sending the typical monthly mortgage payment for a homebuyer up more than $500 since the beginning of this year. As rates quickly eclipse 5% and with the Federal Reserve planning on raising the rates at each of their 6 remaining meetings. Many economists predict that rates will reach 6% by end of year! Over the coming months, we expect their impact on homebuyer demand to change from a motivator—driving a sense of urgency to buy before rates rise further—to a deterrent—causing buyers to step back as the cost of homebuying exceeds their budgets. There are a number of early signs that this shift is beginning to take place. Real Estate investors bought roughly 80,000 U.S. homes which equated to 18.4% of total homes purchased - a worth of $50 billion! Having been in the real estate industry for 26+ years, we have seen out fair share highs and lows and everything in between. Though, this may be overall the most unhinged the market has been since the crash in 2008.
Homebuyers may not feel like the market has gotten any easier. That’s because they’re often competing against investors, all-cash buyers and newcomers from high priced cities who aren’t as sensitive to high mortgage rates. But there are seemingly some early indicators that the market may be turning. With that, we expect the softening to become more apparent in the coming weeks & months, eventually causing home-price growth to slow.
Still, the market still feels very hot, with homes selling faster and for more money than ever before. That’s largely because supply remains near record lows, with fewer homeowners putting their homes on the market. Bidding wars are still common, but homes that would have brought in 10 or more offers earlier this year are now getting half that many. Homes also aren’t selling as astronomically over the asking price as before.
As the imbalance widens, fears of a second foreclosure crisis, like the one in 2008, have flooded financial markets and social media alike. Odeta Kushi, the chief economist at First American, thinks that's unlikely to happen for two reasons. Both have to do with the fact that homebuyers are in a far better financial position than they were in 2008.
"First, the housing market is in a much stronger position compared with a decade ago," Kushi told Insider. "Accompanied by more rigorous lending standards, the household debt-to-income ratio is at a four-decade low and household equity near a three-decade high." The debt-to-income ratio is a common measure of financial health that compares the total amount of debt a person owes each month to their income. It is considered in basically every mortgage application.
Despite inflation surging to a 40-year high in February, Americans still are said to have a tremendous amount of wealth. According to many economists, collectively, households have gained about $2.5 trillion in excess savings during the pandemic and more than half of US states recorded their strongest-ever personal income growth in 2021. With the average mortgage borrower currently owning about $185,000 in useable home equity — the amount of money a homeowner can access while retaining at least 20% equity in their homes — the post Covid-19 housing market hardly resembles the housing bubble that gave rise to the 2008 foreclosure crisis.
Our monthly market update showcases everything you need to know about local real estate trends over the last month.
April Manasota Market Update
Average Sales Price
Months of Supply
Average Days on Market
Average Price per Square Foot