The local real estate market cools down | New
Owensboro’s real estate market has been white hot for months, with home prices above asking price.
But rising interest rates have cooled the market somewhat in recent weeks.
Fortune magazine wrote last week that “the average 30-year fixed mortgage rate rose to 6.28% from 5.3% just a month ago. This is the highest mortgage rate since 2008. The 3.2 percentage point rise in mortgage rates over the past year also marks the highest increase since 1981.”
And in May, the Greater Owensboro Realtor Association reported the sale of 160 homes.
That was down from 182 a year ago, but well above the 107 sold in May 2020 when COVID was starting to ramp up, creating a lot of uncertainty.
But the median price continued to rise in May – to $194,500.
A year earlier, it was $190,000.
And in May 2020, it was $155,000.
Total sales reached $35.8 million in May.
That was down from $38.1 million the previous year, but double the $17.9 million from two years ago.
The average home was on the market for just 62 days in May.
That’s up from 55 days a year ago, but down from 99 two years earlier.
However, the shortage of houses on the market seems to be easing.
There were 178 available last month.
That’s up from 129 a year ago, but down slightly from 197 in May 2020.
Michelle Wiesman, president of the association, said: “It may have been the slight increase in interest rates or the market downturn we’ve seen elsewhere, but May showed a chilled market for our service area.”
She said: “Although house values are holding up, 22 fewer houses were sold last month compared to the previous May. Total sales volume was also down 6% from what we saw this time last year. Even with this slight slowdown, the market here remains solid. »
Devin Taylor, the association’s president-elect, said while sales slowed in May and are trending lower in June, home values ”remain stable.”
He said, “Days on the market may increase a bit.”
But Taylor said that once people adjust to the new interest rates, which he said ranged from around 5.8% to 6.1% on a 30-year mortgage, sales would start to pick up again. to climb.
The market is nothing like it was in 2008, when home values crashed, Taylor said.
“It’s a more typical market,” he said. “I don’t think the values will stay the same.”
Some homes may still sell for more than asking price, Taylor said.
But the bidding wars are apparently over for now anyway, he said.
“Things just slowed down,” Taylor said. “It was a big increase in rates in a very short time. But home prices in Owensboro are lower than they are in many parts of the country.
Nationally, Lawrence Yun, Chief Economist of the National Association of Realtors, says, “The housing market is clearly in transition. Contract signings are down significantly from a year ago due to much higher mortgage rates. »
The NAR reports that “at the median price of a single-family home and with a 10% down payment, the monthly mortgage payment has increased by approximately $800 since the start of the year, as mortgage rates have increased by 2.5 percentage points since January.