Market Conditions; The Good, The Bad, The Ugly
The Good. There is a lot of good news n today’s market, especially in Bridgewater. Market statistics show very positive conditions. Home prices have moved upward over the past year. Year to date numbers (January to June) show that the median selling price for a Bridgewater home increased by 3.37%, from $430,500 during 2017 to $445,000. But even more impressive was month to date numbers. The June 2018 median selling price was $485,000, up 5.9% from the June 2017 number of $458,000. The list to sell price for June 2018 was 99.2% compared to June 2017 at 98.6%. And finally, average days on market decreased 32.69% when comparing June 2018 ( 35 days) versus June 2017 (52 days). So, overall the local market seems to be humming along very nicely.
The Bad. Interest rates for mortgages are again getting attention, and not the good kind. Except for a slight pause in the spring, interest rates have steadily increased to around 4.6%. And according to economists, mortgage rates will continue to gradually increase in the coming months as the Fed increases interest rates to slow the economy. Predictions range upwards to 5.0% by year’s end. While increasing mortgage rates should not dampen home appreciation (See Al’s June Market Watch) it will have a negative impact on the buying population. According to Lawrence Yun, National Association of Realtors Chief Economist, “The abrupt hike in mortgage rates this spring, along with price appreciation and competition in the entry level part of the market, is why first time buyers are not as active as they should be and their participation remains below its historical average”. And first time buyers are the underpinnings of the market.
The Ugly (only for buyers). Even more significant than the rise in interest rates is the scarcity of available homes. Yes, sellers of homes are overjoyed with the response to their listings; crowded open houses, multiple offers and short contract periods. But, there is a downside to this euphoria. Currently in Bridgewater there is only a 2.69 months supply of homes. That is down from 3.52 for the past three months. So, we are in an extreme sellers market right now with buyers facing intense competition and higher prices. Mix in climbing interest rates, and affordability may start limiting the pool of buyers. In addition, with a lack of available homes, mobility, or the ability to move from one home to another, whether for upgrading or downsizing, negatively impacts both demand and supply. Buyers and potential sellers just stay where they are instead of moving. But for now, if you are a seller, this is good news. If you are a buyer, not so much.
If you have questions regarding local market conditions, market values or what it takes to market your home, contact me. I would welcome the opportunity to meet with you and discuss your concerns and plans.