How have mortgage rates affected the market?

The market continues to have forces pushing up against each other. I recently did a study of monthly payments with different mortgage rates. A year ago mortgage interest rates were 3% and now they are at 7% for a 30 year fixed. Let's say you are looking at a home for $875,000 and you put down 20%. That is a loan amount of $700,000. The difference between 3% and 7% is $1,700 a month! That is a significant amount of additional money per month for the same home from one year to the next.

And yet, with the low inventory many realtors I speak with still consider it a seller's market due to the continued strong demand. However, there are some noteworthy changes. Buyer's are no longer waiving appraisals or waiving less significant home inspection issues. I have also started to see seller concessions again where the closing costs are "baked into" the contract price.

Has the market depreciated?
I have not seen a decline in the market yet. What I have seen is that buyers are no longer paying substantially over the asking price on average. Many local areas I've seen are closing around asking price now on average.

Historically we have seen the largest increase in value in the shortest amount of time over the past couple years. Therefore, I do expect to see a mild decline in 2023 but we shall see.

"Mike Fratatoni, Chief Economist and Senior Vice President of Research and Industry Technology of MBA, mentioned that in 2021 there were over 13.5 million new home loan originations. This year, they are projecting to end the year at just under 6 million, and next year they are forecasting less than 5 million. It’s quite a big drop off. Another area of drop-offs is obviously in the drop in refinance loans which are down 85% according to Bob Broeksmit, President & CEO of Mortgage Bankers Association." - Jim Morrison on the MBA Annual recap.

It can be tricky in this market to figure out the value of your home. If you are thinking of listing your home or need the fair market value for estate/tax purposes, divorce, PMI removal or anything else, an expert analysis could save you time, money and a headache. Feel free to give us a call at 908-233-1337 for any appraisal needs.