As a result of inflation, home mortgage interest rates are coming in at an average of 6.25%. This is a higher rate than is desirable for most buyers. As a result, home inventory is curving off as sellers delay listing out of fear of their home sitting on the market for a long period.
In Duval and St Johns counties, the home affordability rate has decreased by 33% in the last year due to inflation. If you want to learn more about home affordability, check out our blog post here.
Is there hope for improvement this new year? We think so!
Our sluggish market yields an absorption rate that remains around a 3-month supply. This means it would take 3 months for all the homes currently listed to be sold without any new inventory being added. If the market reached a 5-month absorption rate, it would be considered equally advantageous to buyers and sellers. Anything over a 5-month supply is deemed a buyers’ market. For reference, we experienced a tremendous sellers’ market at the beginning of 2022, with a 1-month absorption rate in February 2022.
Currently, there is not enough inventory in the market to serve everyone. The hidden benefit of this for buyers is in negotiating power. Review our article here for more information on the benefits of a slow real estate market. The negotiating power of buyers directly correlates with sales to list prices. Homes are being listed at prices higher than what they are selling for.
What is needed for change:
- More home inventory to meet buyer demand.
- Lower home mortgage interest rates to attract more buyers to the market.
What will it take for these changes to occur?
- Inflation must get under control before the Federal Reserve will drop interest rates. Mortgage expert Barry Habib are predicting that this may occur as soon as Spring 2023.
If you’re ready to take advantage of the unique benefits to this slower market, reach out to us today. If you’re interested in getting prepared to buy or sell so that you’re ready to act when the market improves, let us know how we can help. The Fluid Realty team is here for you wherever you might be in your real estate journey.
