| Is our local market going to crash? A Market Crash is defined as the market falling 20% from its most recent peak. Locally prices fell ~6% from the July peak, so is this drop a sign that we are heading towards a crash? I don’t think so, and here’s why: 1. The median price of our market, at ~$275,000, is significantly less than the national median sales price of ~$450,000. Because of this we are much less susceptible to a crash because affordability is much higher in our area. 2. While inventory levels are showing signs of increasing, they remain well below balanced levels. Low inventory will continue to buoy price, even as rates put downward pressure on it. 3. The 6% drop in average price we just experienced is about the same drop we experienced back in 2021—when interest rates were around 3%–indicating that there is an element of seasonality to this reduction versus a sign that we are heading towards a crash. 4. Lenders are getting creative with financing, offering products with lower interest rates in the first 2 years (2/1 buy-downs) and ARM offerings. The idea here is that when rates fall (which could happen as early as 2024), buyers can refinance later. Remember you only have one chance to buy, but you can ALWAYS refi later. Bottom line, because our market is so affordable relative to the national average we should not expect a crash. The market cooling could be viewed as a net positive as we have been out of balance from a supply-side going on 3 years. It’s a challenging market but we have a step by step plans that can help you accomplish your goals, so please reach out! |
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