Thursday, March 28, 2024
46.0°F

Marty and Max: February market report: Rising interest rates keeping prices down

by MARTY WALKER
| March 10, 2023 1:00 AM

Hey Max: With interest rates up, do you have any suggestions on how to take advantage of lower real estate prices?

Great question. Prices seemed to have bottomed out and this seems like a great time to buy. Do you have any money in a 401(k)? Did you know there are ways to use those funds to buy real estate without being taxed now or paying a penalty to do so. It is easy and legal to do. There are rules you must follow just like the 401(k), but the process is simple. I will write a column on this in the near future, however if you would like to know how sooner, please shoot me an email. It requires about 30 days to complete the process. Do not, however, move funds until you have thoroughly reviewed the process. These funds must be transferred from one 401(k) to your new IRA, but you CANNOT put this into your personal account. That would create a taxable event.

Following are our experts' thoughts and analysis of the real estate market going into March. Nationally median prices are up over last year at $420,320 and most of those gains were in late Q1-Q2. Home prices are up about 6%, although there are some markets where this is lower such as ours. Our local MLS median single family home is $479,450 down 6.2% over last year. The primary reason was that buyers were racing to the clock before mortgage interest rates rose. Each week however the price gain is shrinking. Median prices are up a bit over last week and normally prices are gaining momentum each week this time of year. It appears prices have gone as high as they can go when factoring in the mortgage rate affordability conundrum. Prices should slowly move up as we get closer to June but do not expect a huge change and prices should peak well below June of last year. Median prices of NEW listings are flat at $399K and this could be negative in the next week due to spiking prices this time last year. Median price of pendings is $370K, also flat over last year. Last year’s pendings are a little understated due to over bidding, therefore when the pending’s close we should be at or below last year. Once these close in the next few months prepare yourself for the Chicken Little news that the real estate sky is falling with headlines proclaiming, “OMG Home Prices Are FALLING!”

It is not time to panic. Most of the time the following is true and Vince Skully said it best, “When you can keep your head when everyone about you is losing theirs, it means you don’t thoroughly understand the situation.” The reverse of this may be true today. Sales prices are a lagging indicator of the market. A home listed today may receive an offer in April; it closes in May or June and the data does not report until July. What is happening in the market NOW? Inventory fell by another 1.5% to just under 430K homes. There are 60K fewer homes on the market today than there were on New Year’s. Coming out of Q4 we expected a continuation of that market in Q1. That model forecasted 500K homes and we are about 71K homes short. As each week progresses in Q1, we have fewer new sellers and slightly more buyers. Although there are more homes on the market than last year at this time, there are 48% fewer homes for sale than this time in 2019.

Market Forecast: Our team expects inventory to fall for 1-2 more weeks with a slight increase in March. Spring inventory is coming. Folks that are most bearish on the housing market insist we will see a big surge in inventory, however that has not happened to date. We should see an increase in inventory due to the seasonal impact in the next few weeks.

The Good News: Some are panicking over reports and data that cite rising inventory and are convinced this is a sign of a market crash. They most likely are misinformed due to old data. There was a 4% increase in pending’s over last week, however this was 21% fewer than last year. Also keep in mind that price reductions have hit the bottom and prices should trend up in March.

Conclusion: Price reductions indicate that the market is significantly less scary than it was late last year, but slower than recent years.

Make sure when you are listing your home to ask for twilight/sunset images. This can be accomplished by either shooting at sunset or by using a daytime picture and having your photographer edit it to appear as twilight. In summer time, we recommend the latter. These images make for a great leading image to highlight the home's warmth, character and views.

• • •

Marty Walker is a licensed real estate professional and paid consultant. Information shared in this column is of a general nature. For specific questions in relation to your unique property, email to set a time for a consultation. Information: MartyandMax.com or Martywalker@remax.net

photo

Photo courtesy of CHARLOTTE'S WEB & MEDIA

photo

Courtesy image