Record Low Home Sales and Rising Prices
Existing home sales in the US have plummeted to an annualized rate of 4.1 million, marking a 30-year low. Despite the significant drop in sales, the median price of homes has reached an all-time high of $419,000. This paradox of fewer home sales but higher prices is attributed to supply and demand dynamics, with only 3.5 months of supply available. Demand remains robust, partly fueled by people moving across the country for various reasons.
Stock Market Influence
There is speculation that the recent surge in the stock market might be influencing the real estate market. Some investors are reportedly taking their gains from stocks and investing in rental properties. However, for the average home buyer, stock market investments are less likely to be a significant factor in their ability to make a down payment.
Mortgage Rates and Federal Policy
Mortgage rates have seen a slight decline over the past three weeks, currently standing at 6.7%. While this reduction is minor, it offers some hope for potential home buyers. The Federal Reserve has not taken measures to lower mortgage rates directly, but the bond market has provided some relief, suggesting that free market forces might eventually bring mortgage rates below 6%. However, for many buyers waiting on the sidelines, the desirable mortgage rate is around 5%.
Hidden Costs of Selling a Home
Selling a home comes with numerous hidden costs beyond the obvious brokerage commissions. Sellers often face additional expenses such as concessions for repairs identified during buyer inspections, averaging around $7,200. Overall, sellers can expect to lose approximately 15% of their home’s sale price to closing costs, repairs, and brokerage fees, ultimately retaining about 85% of the sale price.
