Bitterroot Valley Sellers 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 homeowner, that means a buyer has more options and can demand more as far as price reductions and better terms.
Now, I find it a little surprising that we have not seen a drop in the prices of homes sold 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.
So most people continued to gain equity in their homes through June of this year, but there are many signs showing that their equity is going to start being eroded away pretty quickly.
The first major sign is that $749 median price I mentioned earlier, those houses started out at about $780,000; there’s been nearly a 7% reduction in asking prices and those homes are still on the market. We don’t know whether they are going to have to be reduced again. That 7% is just how much they came down in one month.
Another sign is that homes are staying on the market longer. Right now, the average listing is 135 days old. Remember when people did not want to put their house on the market because it would sell in two days and they didn’t have a place to go?
What’s affecting the real estate future?
According to the Feds, they are trying to get a handle on our run-away inflation and they’re doing that by increasing the interest rate. Now they’re planning to raise prime 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 paying approximately $3000 = that’s almost $900 a month more in their payment! And of course if they wait until interest rates go up to 8 or 10%, their payment will just go on up. Consequently, fewer people are qualifying for loans, and those who are, are not able to buy as expensive of a house as they could have a few months ago.
Additionally, a lot of people are simply leery of making major life decisions right now. Regardless of what your political affiliations are, few people are confident of this economy so they’re taking a wait-and-see attitude.
As a homeowner, what should you consider to maximize your Return On Investment?
If you think you may want to sell in the next two to five years, this is a CRITICAL time for you to make some major decisions. Chances are, the value of your house has already gone down. You would have been better off to have sold this past winter. Okay, that’s a fact but we are where we are today. If you wait another six months, your home value will be still lower. What are you going to do? Wait to lose more money?
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. We have already come to the top of this cycle are are starting to descend, so you want to sell before it goes down any further.
It’s like the stop-loss principle in stocks. Savvy investors will say that if their stock gets down to a certain point, sell, even if they are losing money on it. Today, you’re not losing money on your house. Most homeowners have experienced a massive increase in the value of their homes, so you are MAKING money if you sell today.
Now I’m not telling everyone to run out and sell their house right away. It depends upon where you are in life and what your plans are. If you like the home you’re in and you think it will fit your needs for the next 2 to 5 years, there is absolutely no reason for you to sell. Yes, the value will go down but then it will start going back up again and when it does, it will go up higher than what it is today. That is how real estate has trended for the past 60, 70 years.
Now I’m sure you realize these stats and trends are changing almost on a daily basis. So to find out more about pros and cons of selling your house now versus at a later date, let us know a little about your particular property and future plans.