Real Estate Market Update
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Wondering what’s going on in the world of real estate and finances, but don’t want all of the media talk that goes along with it? We’ve got you covered with this quick and straightforward update!
Real Estate Market
- April was the second month in a row where we saw a drop in home prices. This is the biggest drop we’ve seen in over a decade. This is good news for home buyers, as affordability has been a roadblock for many. While this drop in prices doesn’t solve that, it does mean we’re moving in the right direction.
- The median price of homes across the United States is $436,800. That's a 32% increase from 2020 when the median was $329,000.
- Rates on a 30-year fixed home loan are averaging around 6.4% in the last year with rates reaching 6.79% on June 1 (the highest they've been since November 2022). For some home sellers who had locked in historically low rates during the pandemic, it’s been difficult to decide whether or not to sell. This is why we’ve seen an increase in "accidental" landlords and people looking into investment properties.
- There were 21.5% more homes for sale in May compared to the same time in 2022. There are still fewer homes available to buy on a typical day in May 2023 than there were a few years ago. Since low inventory has also been an issue for many home buyers, seeing more homes on the market gives many a better shot at having an offer accepted.
- Inflation has fallen below 5%, which we haven't seen since summer of 2021. This is based on the Consumer Price Index, which is the change in prices over a set amount of time for goods and services that we purchase.
- 339,000 new jobs were added in May. Unemployment currently sits at 3.7%.
- Quarter 1 brought us a Gross Domestic Product increase of 1.3%. GDP is the total financial value of goods and services produced by America in a certain amount of time. The higher the GDP, the better an economy tends to be doing. So this increase is good news!
- The debt ceiling deal has been front and center in the media lately. Simply put, this is the maximum amount of money the United States can borrow, meaning once we’ve borrowed that amount, we’ve hit our “ceiling” so to speak. The government works to ensure the country will not default on the debt. After weeks of political deadlock, the Senate gave final approval to bipartisan legislation suspending the debt limit and imposing new spending caps.
- The last Fed Update gave us another 0.25% increase to the federal funds rate, with a hint that it may pause the hikes moving forward. The next update is set to take place on June 13 and 14, 2023. The smaller rate hikes and potential pause mean that the economy is working to slow inflation (with an overall goal of 2%) and avoid a recession.
So, what does all of this mean? While seeing small increases in many areas of both the financial and real estate markets, we’re still not where we want to be. Affordability does remain an issue across the board, causing most of us to look at areas where we can pull back in order to spend wisely.
- For home buyers, this means working with professionals to find a home that fits your budget and a mortgage that fits your financial goals. Don’t count yourself out, just know that you may need to adjust some spending habits and hone in on what you need in a home and home loan to be successful.
- For home sellers, don’t let interest rates scare you. Despite rates being higher than we’d like, they’re still average when we look at the past three decades. If your current interest rate is low, see how you can use that to your advantage. And remember, there’s always the opportunity to refinance in the future.
The debt ceiling deal and Fed Update in June will tell us more about what the future holds, but as of now, the economy remains stable and without risk of recession in the immediate future. Stay tuned for more updates like this each month from the Churchill Mortgage team!