Last month our trivia question was: Of the approximately 53 million outstanding home mortgages, 32.33 million of them are under what fixed mortgage rate? The correct answer was 4% (congratulations to Stephen), and interestingly enough, his winning answer was also the lowest of all the answers we received.
Why does this matter? If you have a 30 year fix rate loan at 4% for $300,000, your monthly principle and interest payment is $1,432.25. If you got a loan for the same amount, but had a 7% interest rate, your monthly payment is now $1,995.91. If you want to keep your payment roughly the same you could only finance $215,000 (1,430.40 monthly payment at 7%). As you can see, buyers have lost a tremendous amount of buying power, and this goes a long way to explain why the number of people looking to move has gone down.
It isn’t all doom and gloom in the real estate world, especially if you are a seller. The number of homes selling continues to fall, but the median sales price is up over 7% when comparing September 2022 to September 2023. Here is the chart from the Real Estate Information Network (REIN, our local MLS).
While interest rates play an important role, in our view the most important metric is the month’s supply of inventory. The month’s supply of inventory is calculated by dividing the total number of homes listed for sale by the number of homes that go under contract. For example, if 100 homes are listed and 10 go under contract, that month’s supply of inventory would be 10 months. A balanced market is between 5 and 7 months. In September 2023 it was 1.76 up from 1.68 for August 2023. It was 1.54 in July 2023 and 1.39 last August.
We are going to use the month’s supply of inventory for this month’s trivia question: What month and year was the month’s supply of inventory higher than 1.76? As always, you can reply back to this email with your answers.
If you are thinking about buying or selling, it is in your best interest to go ahead and give us a call (757-726-7653 for Lee, 757-434-9084 for Harry) or reply back to this email, and we will be happy to talk through your individual situation. We love real estate and are always happy to talk.
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What’s Happening in Suffolk
Touch a Truck & Trick or Treat
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