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Market Update – May 2022

Kansas & Missouri May 2022 Market Update

Pam and SuzAnne got together this week to discuss what the real estate market looked like in May and compared those numbers to last May. A lot of people have been listening to the news and are unsure about the current market conditions, so Pam and SuzAnne took a little extra time to dive deep into what the numbers mean and how they affect those looking to sell or buy.

The average sales price this year compared to 2021 went up a little over $30,000 from $312,712 to $342,837. That’s 9.6% increase! So, if you bought a home last year, you’ve already built some equity. We usually expect a 3-4% increase in appreciation and that has almost tripled.

While closed sales were up 1.3%, pending sales were down 6.2%. So what does this mean? The pending sales have actually been down almost all year, except for February, so that is not anything new. What this does mean though, is that we’re going to have a little bit of a normalization in the market. Even with the numbers down, we’re actually still up in comparison to the pre-COVID numbers.

NAR (National Association of Realtors) came with some numbers that support the market starting to normalize. In 2019, home sales were at 5.3 million. In 2020, they were at 5.6 million. In 2021, they jumped up to 6.1 million. That’s a huge jump! But now in 2022, they’re expecting it to go back down to 5.6 million. Which is desperately needed.

CoreLogic Statistics for House Appreciation During Recessions

If you listen to the news, you may have heard a thing or two about interest rates and how they are up from where they were. Though this is true, they are also down from where they have been. Many have asked why they are going up now of all times. One of the reasons the interest rates are up is because it is the government’s way to slow inflation. Another reason is when the government stops buying securities (MBS) there is more to sell to investors. When the federal prime rate is 0%, investors do not want to buy MBS because they are essentially losing money.

The truth is, this has not been unanticipated. In fact, it is quite the opposite. The government has been saying for a while that come Summer of 2022 they would stop buying MBS’. As of June 1st, they did just that and in combination with inflation numbers being over 3% higher than anticipated, it made rates shoot up approx. 3/4 of a point which drew attention. The fact is, interest rates have been steadily rising for months, it wasn’t until inflation numbers and the sharp incline that those numbers made the evening headlines. The banks and government said the rates are expected to continue to rise throughout 2022. Now, though that sounds terrifying, we are still at and below in many circumstances pre-COVID rates and well below where we were just years before.

So what does this mean for buyers and sellers? This is still very much a seller’s market. The inventory is low and that has not changed yet, but numbers are not going down. So it’s also a great time to buy because we are continuing to expect appreciation. Maybe not 9%, but more the normal 3-4%. The interest rates are not going to be going lower, so now is a great time to buy. And if you are a seller, your home will still be more desirable while inventory is low.

If you are even curious about the market and what your options and possibilities are… call us! We would love to take you through the specifics of your situation so you understand your options and can make the best choice for you and your family.

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