In other words, both buyers and sellers are recovering from a volatile economy.
“The bottom line is that people who started looking for a home six months ago now know how much it will cost to buy that home because of the current economic conditions,” said GBAR. President Melvin Vieira, Jr. And it’s spread across the market. Now sellers are backing out as they realize the potential for a favorable sale is dwindling. ”
Perhaps further showing how quickly things are cooling off, the average price of single-family homes in the area was $763,000 in September, up just 1.7% from last year, down from a first seen of 8.6. % growth at a much slower pace. This is the slowest annual growth rate since the market briefly hit a slow patch in 2019. It was the third straight month of price decline since June’s all-time high of $899,950.
There are many factors currently keeping buyers out of the market. For example, an impending recession, fears over inflation, and a general shortage of housing stock.But above all, it pushes me Mortgage rates have just pushed home buying out of reach for many, Vieira Jr. said.
The national average interest rate for a 30-year fixed mortgage is currently at 6.92%, the highest since 2002 and more than doubled since the beginning of the year, according to Freddie Mac. In other words, a buyer who took his 20% markdown on a median-priced home in Greater Boston would make his monthly payments $1,400 more than a similarly priced home in January. Mortgage rates are heavily influenced by interest rates, with the Federal Reserve recently raising interest rates in an attempt to keep inflation in check.
“For most people, a 50% increase in their monthly payment is unacceptable,” said Darryl Fairweather, chief economist at real estate firm Redfin. Or, most often, they drop out of the housing market altogether.”
While the market decline is bad for people contemplating a move, Vieira Jr. said it shows that things are moving on to more normalcy from earlier times. bidding war For fixer upper characteristics.
This puts the Boston metropolitan area in line with national trends in the housing market, with some housing markets seeing more pronounced declines in the past few months.
Fairweather said he believes these declines will be an “overcorrection” in the next year or so. It wasn’t Greater Boston, but Viera Jr. said it expects to see some price declines here.
Limited new construction could limit downward revisions if supply in the notoriously tight region remains low. Interest rates can also affect inventory, as low-interest homeowners consider how much to pay for their next home and choose to stay put.
Chestnut Hill-based William Raves real estate agent Mary Gillak said there was still strong demand for prime properties, but more and more potential sellers were pulling out of the market.
“I was talking to someone this morning who has a 2.6% interest rate on their current home,” she said. “Given the current mortgage interest rates, she’s never going to sell the house.”