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WHERE ARE HOME PRICES HEADED AS WE ENTER 2023?
Today, I’m going to talk with you about something that is on everyone’s mind who is buying or selling real estate. That would be home prices. Just as inflation and economic concerns and supply chain problems continue plague all of us from fuel prices to the price of groceries, it’s also the real estate market that has been impacted.
In the Cincinnati market area, average home prices through August were $320,424 as compared with $322,089 in July and a whopping $344,586 in June of this year. During the same time period last year, in August 2021 the average home price was $299,225, in July $307,854 and in June $310,904. So, although the prices have eked down a bit from July and a significant amount from the crazy high of $344,586, they are still higher than they were last year. What is still very clear is that the average home prices indicate that the supply of houses is still outweighed by the demand for them demonstrated by the market. What does this mean for house prices for the rest of the year?
Slowing down from fever pitch
As many real estate agents and property experts will tell you, a housing market appreciating as rapidly as has been seen in recent years is not a sustainable level of growth. High real estate market prices are always exciting, especially for those homeowners looking to sell their assets or make a profit. A slowdown to a more level rate of growth and appreciation means that both existing home sales and pending home sales can still enjoy a great deal of potential today. It’s far better to do business in a more sustainable market – and this is exactly the kind of real estate market we see coming to light.
This works out far better for the market at large – both for home buyers and renters as much as sellers. After all, a market in which everyone buying the properties is priced out of the game is simply not sustainable over time. Instead, this easy cooling off demonstrates that housing demand is still high, yet supplies are still scarce enough to give real estate agents a great deal of negotiation leverage. A first-time home buyer can feel a little more confident and in control in a where homes are a little more attainable – yet the profit margins on offers are still very attractive to sellers.
Increased interest rates will impact this market in the months to come. The fed has already signaled that additional rate increases are planned in both November and December. What this means is that some buyers won’t be able to afford homes that they may have previously been qualified to buy and others who hope to move up to more expensive homes may not be qualified to buy homes priced as high as they have been in the past couple of years. What these amounts to is that higher interest rates will begin to slow the increase in home prices. But, while inflation remains high, the costs of building materials among all goods and services will also continue to go up. This impact will be reflected in the housing market as well. So, while prices will go down due to higher interest rates, they aren’t expected to drop significantly for the time being due to the higher costs of everything we buy.
Investing in a home has historically been a safe and stable choice in the long-run. So, yes, prices of homes are expected to go down but they aren’t expected to tank either. And yes, home prices will go up over the years as they traditionally do, but not at the break-neck speed that we saw in the last couple of years. Overall, this means a healthier real estate market. If you’re in the market to buy a home before year’s end and need to finance the purchase it is wise to consult a lender now and lock in an interest rate.
So, that’s what I’m seeing right now. If you’re interested in buying or selling or would like more information to help you decide what you would like to do, please call me. I look forward to hearing from you, soon!