In the residential sector, we have seen a cool off and the crazy offering frenzy has calmed down a bit. Since home values climbed very very quickly, we are now seeing values drop just as fast in some parts of the US. Days on market are accumulating, homes are going through price reduction after price reduction, and rates are now bouncing around from 5-6% on a 30-year fixed. What does all of this mean? People are affording less in today's market due to the increase in interest rates. The market will slow down, it's only natural, but this could also mean a more balanced marketplace between buyers and sellers and make it more neutral, not swaying too much one way or another. In that regard, I feel we will still have a steady pace of people looking to make jumps from their current home into the next home. Also, even though rates have gone up and people can afford less, this may also open the door for 1st time home buyers looking to go the FHA route, which wouldn't be considered before in the offering frenzy market.
Let's hone in on the Fargo Moorhead market itself. The average sales price is up $30,000 year over year for the month of June! As far as new, active, and sold listings go, we are very similar on that front so not much has changed there. In my opinion, we are on the tail end of the market and soon those high prices will be chasing the market. This then causes home prices to come back down, it will help balance out the rates and therefore make it more of a neutral space.
Here is my professional advice. Since we are used to a new norm, that 5-6% on a 30-year mortgage rate seems very high if you've purchased as of the last 2 years. That being said I have a solution. You can always refinance your home in the future. What you can't get back when you decide to buy in the future is the equity you could have had purchasing your home earlier. Even though that seems like a sales pitch, I myself am In the same boat as everyone else and I have the same goals as you, financial freedom in the future which comes through real estate and investments. When you can leverage that equity in the future and acquire more, that is the whole goal. The other side of the spectrum could be, rates don't level off and come back down, now they are 8-9% instead. Now that 5-6% rate seems like a great idea we should have taken advantage of.
