Owning a home of your own has been the American dream for over 75 years. It’s so embedded in our culture that it can create stress and feelings of low self-worth if you don’t own your own home. Unfortunately, that’s not about to change anytime soon.
The cost of home ownership increased so much last year that, according to a National Association of Realtors index, home ownership fell to the lowest level since 1985. The culprit here is the cost of increasing mortgage interest rates, insurance, maintenance, utility and homeowners’ association fees. Municipalities are also raising property taxes to keep up with their increasing expenses of running local government due to inflation. Even homeowners who refinanced when the rates were around 3% or 4% are still feeling the crunch, and first-time homebuyers are gradually being priced out of their own American dream.
The Labor Department reported that consumer prices rose 3.5% in March from a year earlier. The stronger-than-expected inflation data will likely prompt the Federal Reserve to hold rates at the current level for longer than expected. This could also keep mortgage rates frozen in place, further disrupting the real estate market, and keeping homeowners currently holding low-interest rate mortgages also frozen in place.
As I’m writing this, a Wall Street Journal update hit my iPhone reporting that the average rate on the standard 30-year fixed rate mortgage jumped by nearly a quarter percentage point to 7.1% based on a survey of lenders by mortgage-finance giant Freddie Mac. That is the highest level since late 2023 and the largest weekly increase in nearly a year. This is approximately double from three years ago. However, putting it in perspective, it is still a lot more affordable compared to the 1980s when rates were in double digits, ranging from 10% up to 16%.
So much of what goes on in the real estate market is dependent on unseen factors and sometimes even just a general feeling by the population that something is off. Let’s see if the March sales statistics are on or off as reported by the Realtor Association of Sarasota and Manatee:
Single-family properties closed 3.4% less than last March. The median selling price was $498,805, 1.4% higher than last year, and the average sale price was $653,281, 2.4% higher than last year. The median time to contract was 51 days compared to 46 last year, and there were 0.6% more listings than last year.
Condos closed 2.5% more than last March. The median selling price was $342,988, down 2.8%, and the average sale price was $429,893, 2.5% higher than last year. The median time to contract was 54 days compared to 23 last year and there were 14.9% more new listings than last year.
Inventory of properties is up to 4.1 months for single-family and 6.4 months for condos. Six months of available inventory is just about normal and something we haven’t seen in a long time.
The Realtor Association points out the counties have undergone significant changes throughout the first quarter of 2024. The National Association of Realtors reported the biggest monthly drop in sales in more than a year. This and other data suggest that we are transitioning towards market conditions that favor buyers including more negotiating power and an increased supply of inventory per the Realtor Association.
American dream or homeowner’s nightmare? Don’t lose faith, times have been better and times have been much worse, but the dream doesn’t go away.
