You can imagine that I am getting this question pretty much on the daily. There is no short answer to this question, as the effects of market conditions vary widely based on area, price range, and type of inventory, but there is no doubt that there has been a dramatic shift since the end of July. Affordability (or lack of affordability) is still our biggest obstacle due to rising interest rates and low inventory. As interest rates rose, the cost of homes did not fall commensurate with this new factor. So while prices have stalled out a bit, buyers' average monthly mortgage payment today is significantly higher. If you figure that the average home price was $586,600 last January, and is now $532,900, a buyer with 20% down is now paying approximately $600 a month more for the same house. This is based just on the increase in interest rates from 3.0% to 6.5%
With all that news, plenty of buyers in the market still want and/or need to buy a home. So while they are dealing with sticker shock, they are out there bidding on homes and sometimes seeing competition for the good ones. When homes are exceptional and/or priced well, they sell quickly. The Buyers in today's market are understandably looking for value; when they see it, they move swiftly and sometimes aggressively.
The chart above, from one of my favorite online data sources (FRED), puts the current interest rate environment in perspective by tracking the level of 30-year fixed-rate mortgage interest rates since 1971. Periods of recessions are overlaid in grey. What it tells me is, historically speaking, we are still in a relatively low-interest rate period, but the rise was dramatic, and the market has not had time to shift. With the lack of inventory to satisfy the steady demand, I don't see prices having to "make up" for this shift, so we are left with buyers today spending more of their income on housing. And while home sales are down 41% over last January, I expect to see that pick up as the "new reality" has already sunk in for most folks, and they still want to make that dream of owning a home a reality.
In this analysis of larger market trends, it is crucial to remember that real estate is all about micro-markets. The realities of the market will manifest differently for a condo in the Northwest and an oversized lot in Lents, so if you are considering buying or selling and you have questions, please reach out; we're always happy to talk specifics.