What would you do if you had a bunch of savings and the thing you were saving for is unavailable? A lot of first-time home buyers in the country are faced with that exact problem but they’re not all making the same decisions.
The housing market nationally is not performing the way housing markets typically do. The price of housing ordinarily goes down when mortgage rates increase, but as we all know, housing values are still going up primarily because of a lack of inventory.
According to the National Association of Realtors, the sale of existing homes was down 14.6% year-over-year in October with home prices still high. This is arguably one of the worst times to buy instead of rent and many first-time buyers are postponing their weekend house-hunting expeditions in favor of enjoying life.
The worst part about this is that the deferment of house hunting is not just for a few months to see what happens with the mortgage rate or the number of homes on the market, but some buyers are talking years before they try again. So, what are these frustrated buyers doing with their inflated bank accounts? Being the Americans that we are, some of them are taking expensive vacations, others are renovating their existing homes and decorations and the more practical are increasing college funds or retirement funds.
The “we want to buy a house but can’t” savers are turning into consumers, completely setting the economists – who a year ago predicted a recession – on their heads. With oodles of cash available and the likelihood of missing the boat on building equity, they are spending on enjoying themselves, keeping the economy in positive territory. Who could blame them; fiddling with interest rates never has a good outcome.
Time to look at October Manatee County sales statistics reported by the Realtor Association of Sarasota and Manatee and see what’s going on locally:
Single-family homes closed 6.5% more this year compared to last. The median sale price was $479,000, down 12.8%, and the average sale price was $658,503, down 7.4%. The median time to contract was 29 days compared to 24 days last year and new listings were up 24.5%, bringing the month’s supply of available properties to 3.3 months compared to 2.8 last year.
Condos closed 7.5% more this year compared to last. The median sale price was $370,000, up 0.4%, and the average sale price was $415,591, up 7.1%. The median time to contract was 30 days compared to 22 days last year and new listings were up 28.3%, bringing the month’s supply of available properties to 3.8 months compared to 2.3 last year.
Lower sale prices for single-family properties may not look like a good thing, but since real estate numbers are always lagging, this could reflect the rapid increase in interest rates. The really good news aside from the increase in closings is the increase in inventory. Per the Association of Realtors, this is pointing to a more balanced future market, hopefully more like pre-pandemic activity.
Those of you who are not first-time buyers but buyers who would like to move up but don’t want to give up your ultra-low mortgage rate should have a little more respect for your mortgage. It’s hard to think of money you owe as an asset but if you have a fixed-rate mortgage below or around 3% you are sitting on a valuable asset. You may not see the asset in the bank, but you are wealthier for having it.
I’m of the school that you should always enjoy life but still find a way to balance that with improving your finances. All of this will return to normal someday, so don’t blow it all on a trip to Tibet to see the Dalai Lama.
