This report is shared by Franklin Loan Center every month, and it shows some great insights into the current market trends to see where things are going.
The main thing I’m hearing lately is that affordability is holding people back from buying a house. There are two parts to this narrative: housing prices are crazy and it is going to crash, and interest rates are too high.
Breaking Down the Numbers
Taking a look at this chart, you can see that the red line is at a 4.5% growth trajectory since 2003. This is considered the norm and expected growth in the real estate industry.
The other black line is the current pricing and what is actually happening in the real estate market. Interestingly, you can see that this month is spot-on: exactly where we should be based on the expected growth in the market.
Reality in the Real Estate Market
I’m not here to tell you that affordability is great, because it’s not. But, I also need to help people operate in a realm of reality. Which is that housing prices may not be that far off from where they may actually belong.
Is there room for prices to fall because of unexpected events in the future? Of course! We see small drops in the market all the time. It’s not unusual to see ups and downs as inventory changes throughout the year.
This report also shows that both prices and the number of transactions are up year over year, even though we are seeing a little downturn in pricing right now. The report is showing that we have about 2.6 months of inventory, which is well below normal.
What Will Happen in the Future?
Will the market drop again? The reality is that there is nothing in the data that is indicative of that. The numbers change when you look at smaller pockets in the area.
My thought is this: if you are waiting for housing prices to fall, you need to know that the numbers aren’t indicating that it will happen. Of course, we can’t predict the future. In order for prices to come down, we would need to see a bunch of inventory flooding the market, and I don’t know where that would come from.
I don’t think affordability is great right now. But there are a lot of reasons to believe that rates will eventually come down. And at that point, you could take advantage of refinancing options.
If you have any questions or need personalized financing recommendations, reach out to me anytime!