Did Real Estate Gains Peak in June . . . 2021? NOT PRICES, just gains.
A really interesting thing is happening in the single-family home market in Steamboat Springs. And this trend has been going on for a 11 months.
As of March, 2022, we’re seeing the month over month increases in Median Sales Prices leveling off. Not to be confused with “prices dropping” just gains that we’ve been seeing over the last two years are slowing down. So, when we look at the percentage increase from June 2020 to June 2021, we saw a 95% increase in median sales prices.
That’s a huge increase in Median Sales price. So far, June 2021 was the peak or maximum increase of median sales price gains year over year. And since June of 2021, we’re seeing the percentage gains going down. This means home prices are continuing to rise, but just not as much, month after month. Prices continued to increase, albeit at a slower pace until about January 2022 where we’re now seeing sales prices leveling off as of March, 2022.
As for townhomes and condo gains, they’ve had solid gains over the last two years but it wasn’t as dramatic as the single-family home market. The townhome condo market continues to show gains of around 20% today, but these gains are also trending down.
This stabilizing of the real estate market in Steamboat Springs is healthy for the overall, long-term market strength. Stability is the opposite of volatility. So, while home owners love to see values rising, it’s not great if you’re trying to purchase. Being a buyer is never easy, especially over the last 2 years. Unfortunately, the last few months, if you’re getting a mortgage, rising interests’ rates have decreased one’s purchasing power significantly.
As of April, 2022, the average interest rate is right around 5%. 3 months ago, the rates were around 3.15%. What does this mean to your purchasing power? Well, if you were putting 20% down on a $1 million dollar purchase, your payments would have been $4,161 back in January. Today, those payments would be $5,018. That’s a 20% increase in monthly payments.
I’d rather have rates low and enable as many folks to buy a home as possible. However, due to the lack of inventory, there are only so many houses to go around. Until inventory increases, the one sure way to slow the market down is to have interest rates continue to rise.
These rate hikes may result in a smaller number of Buyers who qualify to buy a house, but the Buyers who remain may start to see more selection moving forward. They also may have more room to negotiate contingencies.
If you are considering buying or selling a property in this market, keep the bigger picture in mind and try not to focus on the lending environment of the past and focus instead on the opportunity that lies ahead on your chosen path.