May Median Home Prices and Sales Volume in Montgomery County – graphic courtesy of GCAAR.com
The Federal Reserve recently raised the federal funds rate for the second time this year. In addition, most analysts predict the likelihood of two more rate increases by year-end and additional increases in 2019. The Federal Reserve has suggested that the rate hikes are being implemented to stave off inflation and are made in response to strong economic indicators and low unemployment statistics. Household spending is on the rise as well.
As a result of these Fed rate increases, mortgage interest rates have also seen an uptick and hover just above 4.5% for a 30-year fixed mortgage. This figure remains historically quite low, but buyers worry about additional near and long-term future rate hikes. This may be in part why the 2018 Spring Market has achieved new record-high activity both in terms of sales prices and number of sales.
According to a report issued June 13, 2018 from the Greater Capital Association of REALTORS based on multiple listing service data, in May 2018 closed sales in Montgomery County were the highest on record since 1997. Median sales prices also topped the charts at $475,000, which is 6.4% higher than May 2017.
Pending sales are down however by 1.2% as compared to 2017, largely due to limited available inventory.
Heading into June 2018, there was approximately a 2.3 months supply of housing inventory, suggesting that we are still experiencing a seller’s market. While the news is great if you are selling your home, most people need to buy a replacement home and inventory is tight nationwide.
Buyers have struggled for some time now to find available homes that meet their needs and work within their budgetary restraints. The lack of options has caused many would-be sellers to stay put. Some are instead opting to renovate their existing property, while others are “waiting it out” to see if the right house ever comes along. However, as they wait it out, prices and interest rates continue to rise making it even more difficult to find the “dream home” at a reasonable price.
Our advice: buy now if you can
. Rates are unlikely to go down (not by much anyway, if at all) and the most important value in real estate is the land. In the words of Mark Twain, “Buy land. They aren’t making it anymore.”
If you are considering a home sale or purchase in the greater Bethesda area, please feel free to contact us for a complimentary consultation to discuss your plans. We offer a free market analysis, tips for preparing your home for sale and counsel on the home purchase process as well. Please contact us at 301-229-3652 or [email protected]
or [email protected]
. We are happy to help!