It became evident from the October homes sales data that our market is going through a definite shift from what became the norm over the last couple of years. The supply of homes for sale dropped for the first time this year as rising interest rates and slowing appreciation has continued to discourage potential sellers and buyers.
Higher interest rates and higher home prices have impacted buyers' monthly mortgage payments, causing some potential buyers to make budget adjustments and others to completely press pause on their home search for the time being. According to Freddie Mac, the average 30-year fixed-rate mortgage was 7.08% on October 27, 2022, more than double the 3.14% average in October 2021.
Some sellers have yet to be able to adjust to the new shift, pulling their homes off the market after failing to find buyers willing to pay what they think the properties are worth. In October, the supply of homes decreased for the first time this year due to volatile interest rates and slowed appreciation. The median sales price for homes in Ada County was $561,500 in October, up 4.0% from the month prior and 5.4% higher than in October 2021. Until last month, there have been month-over-month declines in the median sales price since the peak of $602,250 in May of 2022. The last time we saw a year-over-year decrease in overall median sales price was in October 2014.
Homes in Ada County spent an average of 42 days on the market, up from 23 days in October 2021. There is a notable change in year-over-year percentage terms, but it is still worth noting that historically we have seen increased days on the market going into the fall/winter months. Considering the speed at which interest rates have increased, it does not surprise that sales have slowed. We have seen a significant decrease in the number of showings on active properties.
Why Was There Not a Dip in Prices Last Month?
With all the talk of lower home prices, crazy interest rates, and more inventory to choose from, why didn't prices dip last month? While there were 32.5% fewer homes sold in October 2022 than in 2021, there were still 670 homes sold, and the combination of sales tells us why the median sales price did not move much.
When comparing the sales of new construction homes vs. resale homes, new construction sales made up 31.9% of the sales with a median price of $657,500, while the median price of existing homes was $500,000, down 3.7% from October 2021. The new construction homes made up nearly a third of the sales, pulling up the overall median sales price.
Is Now Still a Good Time to Buy a Home in the Boise Area
Most will argue now is still a GREAT time to purchase a home! It is desirable for buyers since they have more options and more time to make decisions, and home prices have trended down. We have seen more and more situations of seller concessions, rate by-downs, and price reductions. With price growth slowing and more inventory, buyers have been able to snag existing homes at a lower price point than just a year ago, with the option to refinance down the road when interests come back down.
Sales May Have Slowed, But They Will Not Disappear
The fact that we didn't see any significant changes in prices in October indicates we likely won't see prices plummet. Still, we may see additional adjustments to come to balance out with the current interest rates. The gap between sales and listing prices is widening as the market is split between motivated and unmotivated sellers. Homes are either being overpriced and sitting unsold or priced and marketed well, leading to quicker sales. Regardless of the market, life will continue to go on, and many life events will require a move.
It is critical more than ever to work with a real estate expert like ourselves, who can help you navigate this market. Call us today to schedule a FREE consultation! 208-473-2203