Market Report: Q2 2024
- Spotlight Real Estate Group
- Jul 15, 2024
- 2 min read
Opinion: Chris' Thoughts
New Castle County is up 7.7% with an average of $420,000. Cecil County has seen a 4.2% increase, averaging $375,000. Chester County has risen by 16.2%, averaging $620,000 in median sale price for single-family homes, excluding new construction.
The local real estate market has experienced a surge in the past quarter despite mortgage rates hovering around 7%. Buyers remain undeterred, making strong offers on houses. In our tri-county area, homes are spending an average of just 5-8 days on the market and selling for 100%-102% above the asking price. However, it's important to note that exceptional homes in great condition may sell even faster and at a higher list-to-sale price ratio.
Curiously, the market remains robust despite the Federal Reserve's attempts to tighten interest rates. The primary factor contributing to this strength is the lack of inventory. Many homeowners express a desire to move but are reluctant to give up their low-interest rates and affordable monthly payments. Consequently, this reluctance to sell has significantly reduced the number of homes available on the market. Currently, we have only 470 homes for sale, a staggering statistic compared to our historical average of 2,500 homes for sale at any given time.
The future of the market remains uncertain, but there are two prevailing opinions. Firstly, some experts believe that prices will continue to rise until demand aligns with supply, potentially happening before interest rates decrease. The Federal Reserve has indicated only one interest rate decrease in 2024, so it may take until the end of 2025 to see mortgage interest rates at 5% again. When rates do drop, we can expect an influx of supply from homeowners who were waiting to move, as well as increased demand as those sellers purchase new homes and previously hesitant buyers re-enter the market. This scenario could lead to a rapid rise in prices.
On the other hand, there is concern related to the COVID-related moratorium on mortgage payments, which ended in 2022. It is feared that many struggling homeowners who deferred payments may face foreclosure within the next year. This potential increase in distressed properties entering the market could lead to a rise in inventory, potentially lowering the appraised value in the area and slowing down the rapid appreciation we have witnessed over the past five years. Even in this scenario, we will not see a dramatic decrease in price, but rather a slower appreciation rate.
In summary, the local real estate market is currently thriving, driven by strong buyer demand and limited inventory. The future trajectory remains uncertain, with possibilities of continued price increases or a potential shift due to increased distressed property inventory.
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