Housing markets are constantly shifting across the country due to recent tumultuous times. October 2022 saw the United States of America housing market drop 7% for the third consecutive month — properties worth $423,000 at the start of the year have fallen to $369,800.
Since most homeowners take out mortgages when purchasing homes, the loan type dramatically affects the housing market and the economy as a whole. Thus, experts speculate that the third-in-a-row decrease comes from the 14.2% decline in mortgage applications nationwide.
Moody’s Analytics says house prices will likely fall between 5% and 10% again, regardless of a recession, thanks to the higher mortgage interest rates and homeowners’ unwillingness to refinance properties.
The Median Sale Price Has Dropped Once Again
While the entire country has been affected by decreasing home prices, preliminary data suggests the Triangle real estate market is one of the most impacted.
According to information published by the Triangle Multiple Listing Service, the median sale price in October 2022 was $392,000 — a record low since February of this year and a drop of almost $30,000 compared to the median sale price of $421,757 in June 2022.
Despite that, homes in the Triangle remain costlier than one year ago. October 2021 saw the median sale price track down to $365,000.
The Reasons Behind the Home Price Decrease
The Federal Reserve started raising interest rates earlier this year, shifting the financial markets and increasing the cost of buying properties using a mortgage.
The latest Freddie Mac data says the average interest rate for a 30-year fixed-rate mortgage is meandering around 7%. However, it’s set to hike higher after the Federal Reserve elected to increase the federal funds rate by 0.75%.
High interest rates tend to price buyers out of the housing market. However, agents say prices (in the Triangle, at least) are slowly returning to cyclical trends. The market is heading toward balance for buyers and sellers.
Also mentioned is the season — winter is never a peak period for property listings. So, even though the number of potential homebuyers in the Triangle has dwindled due to rising interest rates, there are also fewer sellers during colder months.
Nationwide Though, Homeowners Have Lost Tremendous Equity
May 2021 saw homeowner equity collectively peak at $17.6 trillion, following the pandemic-initiated 45% jump in home prices. But come May 2022, and $1.5 trillion of that equity has vanished.
An analytics and mortgage software firm, estimates that the average property owner has lost $30,000 in equity as home prices drop for the third month in a row.
In keeping with the less-than-stellar statistics, the number of borrowers currently underwater on their mortgages is double May’s value.
While it’s still less than 500,000 borrowers, it’s a situation that necessitates explicable careful monitoring.
Buyers Should Be Aware, Not Scared of The Ever-Changing Interest Rates
Despite the less-than-rosy outlook for current homeowners, buyers in the Triangle area are experiencing the best time to buy in the last one to two years.
At first, the average punter might not see the sense behind the statement. However, buyers can make use of the fallen house prices to get more bang for their buck, even with the 7% interest rates. After all, the cost of renting has increased year-over-year, with more growth expected in the future.
Provided buyers can make the higher monthly payments, many experts suggest striking while the US home prices are down.