On Aug. 17, mortgage interest rates spiked to 7.09%, the highest in years per Freddie Mac. A lot of this has to do with the 10-year treasury yield, which hit its highest level since 2008 on the same day. Since mortgage rates tend to move somewhat with the 10-year treasury, rates went up combined with the Fed’s ongoing attempt to tame inflation.
Last year when rates started going up, except with a brief decline at the end of 2022, the consensus was that the higher cost to borrow would be temporary. Now, however, eight months later, all players in the real estate market are adjusting to the idea that higher rates are either here to stay or at least will be around for a long time.
So, what does that mean to the average home buyer? Essentially it means it’s time to get off the bench and make a commitment since things aren’t changing any time soon. That, of course, is easy for me to say but the truth is buyers are finding it is the hardest thing to accomplish even after they adjust to higher rates.
The lack of inventory all across the country is pushing prices up to a level many buyers can’t afford. After all, if you had a 3% or 4% mortgage, would you sell your home and move on to something else unless you absolutely had to? Probably not, and that is the log jam in the real estate market. About 60% of the country has mortgages below 4% and even homeowners who missed the absolute bottom are still ahead of the curve by at least 2 percentage points.
Buyers need to understand there is no crystal ball and even the real estate gurus called it wrong with their temporary thinking. Now is the time buyers have to bite the bullet by downsizing their expectations and being flexible. Not all of your children need their own bathroom or even their own bedroom, and you can prepare dinner in a kitchen without a quartz island; millions of people do.
Look at the additional expense of a higher mortgage from a monthly payment perspective. When you break it down into financial pieces, it may not be as intimidating, kind of like upgrading your iPhone. Don’t ask what it costs, just what it will cost monthly.
Let’s look at Manatee County’s July sales statistics reported by the Realtor Association of Sarasota & Manatee:
Single-family homes closed 10.1% more properties this July compared to last July. However, the median sale price of $515,000 was down by 1.2% and the average sale price of $641,991 was also down by 6.9%. The median time to contract was 29 days this July compared to 9 days last year and the month’s supply of properties was 2.7 months, about the same as last year.
Condo sales were down 8.0%, the median sale price was $389,500, down 0.4% from last year and the average sale price was $523,922, down 2.5%. The median time to contract was 36 days this year compared to 10 days last year, and the month’s supply of properties was 3.4 months compared to 1.6 months last year.
The Association of Realtors states, “Despite higher interest rates, the housing market in Sarasota and Manatee counties stays strong due to low supply and continued demand with relatively stable prices.”
A lot of what’s going on in other parts of the country does not aways apply to Florida, which tends to march to its own drummer. All real estate markets are local, and all states have different economic challenges. Sales are taking longer to book, but overall, Manatee County is hanging in there.
