How long will it take for home prices to recover?
It’s a question on the minds of many Americans as the housing market slowly starts its decline after the Federal Government decided to raise interest rates.
And while there is no simple answer, economists say that prices are unlikely to return to their peaks anytime soon.
The question shouldn’t be, how low will home prices go?
The questions American homeowners should be asking themselves is, how long before they come back?
The most important number in the housing market is not the median home price, which can be pulled down by a few low-priced sales. When interest rates go up rapidly, that affects the lower price points the most. This removes those sales from the data pool, leaving only the higher-priced sales to be reported. That is a problem when calculating the housing market’s stability and growth on the average or median home price.
What matters more is the volume of sales, which has been declining for months. In the latest reports, home sales are down eight percent, mainly at the ultra-luxury and in the range of homes that first-time homebuyers typically purchase.
In other words, it’s not just that prices are falling but also that the lower and middle-priced homes are not selling as fast as they once were.
The speed of the market’s correction will have a lot to do with how long it takes prices to recover.
The good news is that interest rates are still relatively low by historical standards, and buyers are still in the market. In addition, many homeowners have built up so much equity in their homes that they can afford to sell at a loss and still come out ahead.
The reality is that we may be in for a long, slow recovery. So if you’re considering selling your home, it’s probably best to sell and capture all of the ultra-low interest economy-infused equity caused as a reaction to the pandemic shutting down our markets.
It is unlikely that prices will zoom past their current pricing for seven years.
Most people will stay in their homes because of fear. The brave people will sell and purchase a great deal because people will be forced to sell in the future. Or they sell and rent and watch as their options and prices fall around them only to get ahead in life.
The market is cyclical, and we are overdue for a downturn. It’s just a matter of when.
If you’re considering selling your home, the time to do it is now. You may not get another chance like this for years to come.
To get your home listed before all of this happens, call our team at 509-255-8070.
You can always email me your address and phone number and we will reach out to tour your house and tell you what it would sell for.
Nick McLean Real Estate