Market Statistics May 2022 vs May 2021
The biggest issue facing the housing market as we enter the summer of 2022 is rapidly rising interest rates. From an average of less than three percent at the beginning of the year, interest rates as we headed out of May 2022 were over five-and-a-half percent. That two-and-a-half percent rate increase has a significant impact on a Buyers’ ability to purchase.
Home prices continued to rise (up over thirteen percent from last year). The average home price currently in El Paso County of existing single-family homes as we headed into June was $552,645. Homes are sitting on the market a day or two longer than in May 2021, but sales are still brisk.
During this time period, 250 homes went out of contract and were relisted (Back on Market). Twelve listings expired and fifty-six listings were withdrawn.
The difference for a Buyer trying to purchase means that if you could afford a home at $450,000 when the rates were at three percent, you would now qualify for a $316,000 home at the current rate. Compounding that is there are so few livable homes that come on the market under $450,000. When they are listed, there is fierce competition. It’s a vicious cycle.
Housing Market Changes April to May 2022
The months’ supply of homes available in May was three weeks (STILL a crazy Sellers’ Market). The months’ supply available in April was two weeks. Mortgage applications have fallen dramatically in the past month. They are down over forty percent from the same time last year. They are now at the lowest level in twenty-two years. That indicates that in a month to a month-and-a-half, sales will also decrease.
The total number of active listings increased over forty-five percent over the past month. But that was also an increase of over forty-three percent from last year. Very typical numbers as we move from Spring to Summer in the real estate market.
As we headed into April 2022, rising interest rates were inching toward five percent. As we ended May of 2022, rates were five-and-three-quarters percent. Those are the highest interest rates since 2009.
Housing Market Predictions Summer 2022
Don’t let the headlines scare you. There is no economic expert predicting the fall or depreciation of home prices. The numbers indicate a continuing appreciation, but at a more moderate rate. Deceleration does not equal depreciation.
Sales will definitely slow as we progress through the summer. The market will still be active, and it will continue to be a Sellers’ Market. (We are currently at three weeks of inventory. It flips to a Buyers’ Market when there are approximately seven months of inventory.)
If we see a continuation of the rapidly rising interest rates, it will take longer to sell a listed property. But a little longer means two or three weeks, something we haven’t seen in the past few years. There is no question we are in a slowdown, but prices are not going to fall in the foreseeable future.
History shows that when interest rates go up, prices don’t rise or fall, they tend to stick where they are. They don’t go up much, but they don’t fall either.
Experts are warning Buyers not to wait for falling prices. It doesn’t appear that’s going to happen. And rising interest rates will price you out of what you can currently afford. It’s still a great time to buy.
Investors are gun-shy with the rising interest rates because if rates come down, people will refinance and lenders will lose a lot of money as Buyers seek lower rates.
If you’re looking for someone to help you navigate these challenging times, call, text, or email Mimi Foster today to find out where your bargaining strengths might be in this changing market.