Real Estate Market Misconceptions

I recently came across a new survey by the personal finance company NerdWallet. Their findings showed that most Americans are terribly misinformed about the nation’s housing market. So that you too aren't misinformed, I thought I'd highlight some of the survey's findings here for you!

  • According to the survey, twenty-eight million Americans plan to purchase a home in 2023. On average, they hope to spend $269,200 (this is national, not the Bay Area obviously!)
  • The above figure falls more than $100,000 short of the median home price, which was $388,100 in December, according to real estate brokerage Redfin. Home prices crossed the $269,000 threshold sometime in 2013, Federal Reserve statistics show. 
  • A head-scratcher: 61 percent of Americans told pollsters current mortgage rates are unprecedented, meaning that they have never been seen before. 

Take a look back at the 1980s when the 30-year fixed rate exceeded 18%. That was unprecedented. Or in January of 2021 when the 30-year fixed rate was at a record low of 2.65%. That was unprecedented. But today's rates are in line with historical averages. Inflation prompted a series of hikes in 2022 and pushed mortgage rates back to “normal” levels, at least in a historical sense. According to Trading Economics, the 30-year mortgage rate in the United States averaged 7.75 percent from 1971 until 2023.

Source: Freddie Mac Primary Mortgage Market Survey®  

Back to the survey results...

  • Two-thirds of Americans surveyed said they expected an imminent crash. 
  • Nearly 30 million Americans plan to buy a home in 2023. Seventy percent of Americans who had planned to buy a home in 2022 were unsuccessful.

Lawrence Yun, chief economist for the National Association of Realtors, forecasts an average sale price of $385,800 this year, about the same as last year. Redfin predicts a 4% drop. In our area, we have seen a drop in prices. Not the most favorable news for sellers, but not a crash. And, if you've been in your house for a while, you're still most likely ahead.

“Home prices already have been falling, especially on the West Coast, and prices will fall in some cities in 2023,” said Holden Lewis, a home and mortgage expert for NerdWallet. “But a drop in home prices isn’t necessarily a crash.”  

 If you're unaware of what's happening in the housing market please call, email, or comment, and let's have a conversation.

 

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