Bitterroot Valley Buyers Market Report
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What do the numbers say?
There’s no doubt that we’re in the midst of a major market correction but it is providing some mixed signals at the moment.
What do we know definitely? We know that as of now we have 231 available homes in Ravalli County ranging in price all the way from $159,500 to 13,900,000. So the number of available homes is up substantially. For a home buyer, that means a buyer has more options and can possibly demand more as far as price reductions and better terms.
However, I find it a little surprising that we have not seen a drop in prices overall in June. The median sale price was 749,000, up over $100,000 above the median price of May of this year. And, of course, it is way over the price of June of 2021, which was $447,500 – that’s a 52.5% increase.
These prices can be alarming to anyone thinking about buying a home, especially if you’re a first-time homebuyer or a move-up buyer. However, there are some encouraging signs for the future and then I want to talk to you about timing, which is critical right now.
That $749 median price I mentioned earlier, those houses started out at about $780,000; so there has been nearly a 7% reduction in asking prices of homes that are currently on the market, and that’s just in one month.
Another sign is that homes are staying on the market longer. Right now, the average listing is 135 days old.
So do you buy now or wait for prices to come down?
Actually, interest rates are what you want to keep an eye on, much more than home prices. Yes, it hurts to even think about paying so much for any one investment. But those interest rates affect that payment you are paying each and every month.
According to the Feds, they are trying to get a handle on our run-away inflation and they’re doing that by increasing the prime rate. Now, they’re planning to raise rates every time they meet for the next 9 times. And of course, you know that any time the prime goes up, the mortgage rate follows. A lot of people are predicting that we will be in the double digits again. Some are just pushing for a massive rate hike now and get it over with.
At the beginning of the year you could still get a mortgage loan around the 3% mark. Today it is over 6%. The person who bought a $500,000 house in January is paying a principle and interest payment of about 2100. To buy that $500,000 house today, they’re going to be paying approximately $3000 = that’s almost $900 a month increase in a monthly payment! And of course waiting until interest rates go up to 8 or 10% will just make that payment go up that much more.
So if you wish you could buy a home but just don’t see how you can do it, what is your answer?
We know that it is going to cost you more to get into a home today than what it would have if you had purchased it several months ago.
I’ve used the analogy of the tree many times. When is the best time to plant a tree? 30 years ago. When is the next best time to plant a tree? Today. Right now. The best time to start building your foundation, or strengthening your foundation is right now. It’s not going to help to wait. You still need to live somewhere for the next few years.
As time goes on, you may be better off to wait for about two to five years when the market starts to turn around, which it will. These trends have been occurring over and over for the last 60, 70 years. But you know how miserable it is to stay in a house that no longer fits your needs – well there is one thing worse yet and that is that it is self-defeating to buy a house for your landlord, which is exactly what you’re doing if you are renting.
I highly recommend sitting down with the old-fashioned pros and cons sheet. Evaluate the advantages and disadvantages of buying now versus later AND the weight to apply to each of those pros and cons. We will sit down with you on an individual basis and evaluate where you are today and where you want to be in three years, five years, ten years from now. There is no cost or obligation for this personal planning session. We just want people to have the knowledge and tools they need to make the best decisions for themselves.