Fall Moscow Market Report
We are officially in the best season of the year! Fresh apple cider and cinnamon sugar donuts, football and sweatshirt weather, Thanksgiving turkey and pumpkin pie, hunting season and changing colors: Fall just can’t be beat! Fall is also always an interesting time in the real estate market. Our local market is seasonal and while spring is always the most active season for home sales we often see another bump in the fall after things settle down from summer vacations and the start of school. As we move later into fall it can be a good time for buyers to find a more favorable deal. This seems to be especially true this year. How can that be when affordability is lower than it has been in nearly 40 years? This may make you think a crash is coming but the major difference this time around is the state of current mortgages. In 2006 a quarter of all mortgages were adjustable. Now only 5% are adjustable. This combined with the fact that a recent survey showed that 80% of all mortgages are currently under 5% is keeping inventory low. Those homeowners sitting on a 3% fixed rate mortgage are not very motivated to sell their house and take on a new mortgage at the 7.5% rates we are seeing today. So, given the current rate environment, both home buyers and sellers are holding tight. However, the seller with their home currently on the market as we head into winter will likely be fairly motivated to sell. They are facing the prospect of higher rates, property taxes coming due, utilities, and the idea of maintaining and holding a home through a snowy winter. So, if you are in the market and willing to either brave the current rates and hope for a future refinance, or are a cash buyer, continue looking seriously this fall and don’t be afraid to make offers!
Are rates likely to stay elevated? Now, I am fairly cynical about the Federal Reserve and agree with what I heard David Bahnsen say recently: that they are essentially a political entity and they will not allow rates to stay this elevated going into an election season. This leads me to believe that this winter will be very slow with most buyers and sellers hunkering down as rates continue to rise or hold at the higher levels. My guess (and I cannot emphasize enough that it is a GUESS) is that rates will start to drop this spring in an attempt to stimulate the economy and make Americans more optimistic heading into the 2024 elections. If this is the case I think the spring housing market could be very hot. We already have quite a bit of pent up demand and this will only increase with low activity levels over the winter. So I think we will end up seeing a similar trajectory to last year with an exaggerated seasonal slow down this fall and winter and a bump in the spring spurred on by lower interest rates and continued shortages of inventory.
The main thing to remember though is that real estate is a long term investment. As such the short term market dynamics should not paralyze you. Whether you are looking to invest, buy or sell your primary residence, you should analyze each deal based on your particular circumstances and goals. Then, move forward with confidence in your numbers. If you need help analyzing your opportunities and making a decision, let us be your guide!
-MIKE CHURCH