| August 14, 2023 |
This is the best housing market for buyers since 2019. The current supply of homes is modestly higher than last year. This will keep prices flat to 6% higher over the next year.
Lock in today’s flat pricing. When mortgage rates drop, refinance. Your home will be an appreciating asset as you lower its carrying cost.
In May 2022, due to rising interest rates, the rapid acceleration in home prices hit a ceiling. A price correction has been in play. In Sarasota County, median sold prices for existing single family homes fluctuated in the upper-$400K to low-$500K range.
Single family resales found a floor in January 2023, with a median sold price of $450,000. In February, prices rose to $490,000, ending July with an up-swing at $525,000. Median sold prices are now essentially unchanged from last year.
Inventory is moderately elevated at a 3-month supply (1,377 homes for sale), but coupled with interest rates near 7%, prices are likely to remain flat. Mortgage rates are too high to create growth in sales. When the market is hot, less than 1/3 of homes for sale have price cuts. Last week 49% of homes had price decreases. Dropping prices means sellers are more flexible.
I do not expect interest rates to go much higher. Most economists anticipate a soft landing for the housing market. As inflation subsides, rates will come down to 6%. Sidelined buyers will reenter the market. Falling rates will trigger increased demand. But the supply of homes will not materially increase until interest rates plunge below 5.5%.
