Is the Grand Junction Housing Market Correcting?
If you’re following the news, all of the headlines about conditions in the current housing market may leave you with more questions than answers. Is the boom over? Is the market crashing or correcting? Here’s what you need to know.
As we enter the busiest time of the year for real estate, interest rates are mingling around 5%, and home values still quite high (the median listing price is up nearly 20% since this month last year in Grand Junction).
Currently, the housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand.
At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.
Here’s what trends are shaping the current real estate market and what to expect this summer…
1. There Will Be Less Competition (Compared to Last Summer)
Rising interest rates have kicked many would-be first-time homebuyers out of the market due to non-affordability. Consequently, we can expect fewer buyers competing over the same house in the summer market. Nationally, in the spring of 2021, the average number of offers on a home was about five, according to Fool.com. This summer, a well-priced home can expect one to four offers.
However, there is some good news for buyers! The number of homes listed in May has increased by 63%, compared to last year, offering slightly more inventory to choose from.
2. Increasing Rates are Affecting Affordability
For first-time home buyers, the costs of buying the same home this year compared to one year ago has increased by 55% due to higher home prices and higher mortgage rates, says Lawrence Yun, chief economist of the National Association of REALTORS. Simply put, for every 1% increase in interest rates, buyers lose about $10,000 of buying power.
The Jancie Burtis Team has your Grand Junction real estate needs covered this summer!
3. Both Buyers and Sellers Can Take Advantage
Demand for housing will remain high, despite the market slowdown. It’s still a seller’s market and most sellers continue to receive full-price offers for their homes. As interest rates increase, this may lead to a more sustainable home price growth, which is good for buyers.
4. The Market Will Slow Down, but Not Crash
If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels.
This is because inflation along with increased mortgage interest rates is causing an affordability issue. Homes will stay on the market longer and fewer offers will be made on the homes that are for sale. However, most indicators of a housing market crash are not present.
Not sure what move is the best for you? Contact our team for a comprehensive analysis of your property or your homeownership goals.