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Homes for sale Friday, January 27, 2023 on Potter Avenue in Modesto, CA.
aalfaro@modbee.com
Stanislaus County home buyers and sellers are likely to see interest rates rise again this year as demand and sales decline, according to real estate experts.
After a strong start to 2022, the Federal Reserve’s decision last summer to curb inflation through a major rate hike had an immediate impact on local markets, according to TrendVision data. Last year, median home prices in the county fell 4.5% to end at $420,000.
But the drop in home sales prices came after median sales prices peaked at $485,000 last April and were up 11%, said Daniel Del Real, broker associate at PMZ Real Estate. I’m here.
“It was a pendulum. It was a two-story year. We saw a median 11% rise in the middle of the year and are now down 4.5% from the end of 2021,” he said. rice field.
Del Real said he expects the second half of last year’s narrative of falling home prices and rising mortgage rates to be the dominant narrative in the real estate market in 2023.
This should reflect a statewide forecast by the California Real Estate Association, which predicts an 8.8% decline in median home prices in 2023.
CAR President Otto Katrina said in a group statement on forecasts for 2023, “With home sales and prices projected to decline next year, the market is changing and buyers and sellers are adapting to the new realities of the market. I am.”
Mortgage rates have largely followed Federal Reserve rate hikes and are expected to boost median home sales prices in 2023. Del Real said higher interest rates meant lower affordability for buyers.
So instead, some local sellers have decided to stay in their homes. We need to move to interest rates. Mortgage rates at the end of 2021 were around 3.1%, but by the end of 2022 he jumped to 6.1%.
Del Real said higher interest rates could mean up to a 30% increase in lifetime payments for buyers, and many could end up with off-market pricing. But he said there is reason for optimism in the new year, as many expect rates to stabilize by midyear.
“We’re going to have another year with two stories. The first two quarters of the year because we’ll see what the Federal Reserve does. You won’t find a button with a stable price,” he said.
He said another story coming into the new year is that both sellers and buyers are becoming realistic about where the market is now. He said buyers, sellers and real estate agents are in a “losing-losing” situation with low median selling prices, high mortgage rates, and fewer transactions overall.
“We are having a real conversation with the seller and they say you have to set a price to bring your home to market. “And the seller has to say that even if the buyer is ‘winning’ because of the lower price point, it’s really not because the mortgage interest rate and overall payments are higher.” Everyone needs to work together to create a successful deal for all parties. ”
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