July 2022 - Market Update
Last month we mentioned the real estate market entered a bit of a shock due to rising interest rates and inflation numbers, leading to a decrease in home demand. This month we can officially say the market is cooling, and we are now seeing price cuts and increased inventory as sellers try to cash out on their equity earned in the real estate boom we experienced.
A big factor for the real estate market continuing to cool that is not being talked about is that buyers and builders are in a pause and waiting to see what happens next mindset. Rising interest rates, inflation, and buyers/builders on pause are some of the reasons why “1/7 homes on the market have now gotten a price cut” as reported yesterday by Chief Economist of Realtor.com.
According to Trading Economics, building permits in America have “dropped 7% to an annualized rate of 1.695 million in May of 2022, the lowest level since September of last year and well below forecast of 1.785 million”. Due to economic uncertainty, we believe the number of permit approvals will also decrease for the month of June 2022 once the reports become available.
Inflation continues to affect the US economy and real estate market. Last week a 9.1% inflation increase was reported for June 2022. Because of yet another record-breaking inflation increase, many economists and analysts are expecting the FED to announce another interest rate increase after their next meeting on July 25-26. This means Americans who are on the fence for buying a home will face a tough choice of whether to wait to see what happens with the market or choose a buy a home before the likely increase of interest rates.
The good news about the real estate market being shaken up is that home prices are finally coming down and stabilizing, but with rising interest rates it doesn’t seem to be helping much, especially for the modest buyers. Economists and analysts are currently suggesting homeowners should expect decelerated appreciation going forward. Bright MLS reported that in WASH DC metro, the median sales price increased by 5.8% up to $598,032 for the month of June 2022 compared to June 2021. When considering buying or selling real estate in a time of uncertainty like we are it is essential you real estate advisor understands the market and excels in negotiations the way we do. For any questions about the current market conditions or home buying/selling process please give us a call!
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