With the recent rise in the federal funds rate and
jump in mortgage interest rates to nearly 6%, it’s clear there is a shift
underway in the housing market on a national scale. As important as the
national picture is, we want to focus on the changes year over year in the
Pagosa Housing Market.
In short, the numbers are down by several important
measures. First, the number of sales is down 31% from a year earlier, and the
total sales dollar volume is down by 7.5%. The median selling time increased by
about 10%. What is also interesting is the Median Selling Price is $525,000, up
by 28% from a year ago. Is this because all the homes priced around $400,000
increased to $525,000? No, not exactly. It is a combination of price
appreciation and a change in buyer preferences; that is, more buyers moved up
into higher priced housing choices. We know from studying the data that prices
have continued to move upward, due to higher demand and higher cost of new
construction. But what we also have seen is more buying activity in the higher
Another interesting change confirming the shift is the
increase in high-end inventory. We now have an 18-month supply as compared to a
6-month supply one year ago.
What significance do these shifts represent for those
considering selling or buying homes in this market? Sellers should expect competing
offers unless their listing is in the lower price range and very attractively priced.
At the upper end of the price scale, Sellers should not be surprised if they
have fewer showings, nor should they dismiss initial offers outright, that come
in far below their listing price. With more choices, Buyers tend to bottom test
the price points. An experienced real estate advisors will guide you through
the offer and counteroffer process to determine if you can pull the Buyer up to
an acceptable number.
For Buyers, double check your Loan Pre-Approvals. If
your Loan Commitment has expired, be sure to contact your lender to confirm
what your new limits are. The increase in interest rates has added nearly $250
to the $400,000 mortgage monthly payment. Be sure you are still qualified for
the price range you are searching within. FNMA has made changes recently to its
loan programs for the purchase of second homes. Understand what impact these changes
have on qualifying, borrowing limits and monthly payments. Your professional
real estate Advisor knows the most effective strategies to help you achieve
success as a Buyer.
Inflation concerns, higher fuel prices, rising
mortgage interest rates, and declining stock market returns are all impacting
the market, both for Sellers and Buyers. We expect this shift to continue in
the months ahead and are discussing with our clients our recommendations going
forward to keep ahead of the shift. Call Pagosa Source (970 264-7000) now to
set up a time to discuss your situation.