The debate rages…are higher mortgage rates hurting demand; causing prices to drop? How can prices
drop with supply still well below demand (Econ 101).
These are two different aspects both with different implications on buyers.
Higher rates are impacting buyers, significantly. A year ago, a buyer bowering wanting a payment
around $1,800 a month could borrow $400,000 for 30 years at 3.5%. Today, to keep the same payment,
they can only borrow $270,000. A dramatic impact. Buyers needing to buy can come up with more
cash, or they can step down to a lower price point. We’ve seen buyers stepping down in price, but still
expecting features at the higher range. Those buyers are expecting move-in condition, maintenance up
to date, and more. It is not a seller’s market to them. *(note – we’ve new seen four straight weeks of
lower mortgage rates).
Basic economic supply and demand say it is a sellers’ market….2 months of inventory. A recent listing in
the $500,000-$550,000 range had 18 showings over 4 days. Total inventory for sale in that price range
– 12. What will happen to prices with demand still high and inventory limited, well it is hard to see
prices crashing. Based on that one house there aren’t nearly enough homes to meet the demand. I see
a stabilization of prices or rising at a slower rate. We do have some sellers coming to the “hot market”
late, with their homes over-priced. In those scenarios we will see price drops from list price – but that is
the list price dropping; not the sold price. Keep in mind, every price range has different supply! A
seller’s advantage in one price range may be a buyer’s advantage in another price range.
In summary – we are transitioning to a more stable market. Inventory of homes will continue to rise and
we may have seen the high for mortgage rates for the next year or so.
Every house, neighborhood, and market location is different. If you want to discuss your situation, just call/text/email me at (757) 254-6678 or email@example.com.
Ted Evans, Associate Broker Coldwell Banker Traditions Williamsburg VA tevansrealestate.com
Williamsburg VA Realtor