Navigating the Current Real Estate Market in Central Mass: February 2023
The question I’m asked the most, that’s on everyone’s mind who is even considering buying or selling a house, is “what’s going on in the Real Estate market?” I’m always happy to speak with people about this, but in the meantime, here is an overview of where I believe we are in terms of interest rates, prices, quantity of buyers and sellers, and whether it’s a good time to buy or sell. My husband Jay and I collaborate well, so this monthly story will always be a joint effort combining our skills, available time and market awareness. 🙂
First, to dispel a misconception, real estate, and a house in particular, is an investment, not simply an expense, so your house is an ‘asset’, and an asset of the type that tends to hold or increase its value. A car, for instance, is also an asset, but it declines in value over time. A trip to the grocery store is not an asset–it’s an expense, because the food all gets eaten and there’s nothing left, so you have to go to the store again, paying exorbitant prices. A loaf of bread certainly doesn’t become more valuable over time.
A good personal example of this is that Jay recently had a major milestone birthday, and I threw him a surprise birthday party. It was a rousing success, with many people from his life making the trip to tiny Princeton, MA to celebrate with him. However, there was one flaw in the plan….I overdid it on his surprise present, buying him a tractor. We don’t have any farm animals and we don’t grow anything, but we’ve got a fair amount of land (and with the past week’s weather, a lot of downed tree limbs) so, despite not having any agriculture going on here, I thought a tractor was something of a necessity. Jay was quite upset I spent the money I did on the tractor, until he justified to himself that a tractor is an asset, and given how much inflation we’re having, an asset that’s going to go up in value. That’s quite different from a vacation to Costa Rica, for instance (I don’t like to fly, so that gift wasn’t going to happen). Once you go on that vacation, you have the memories, but you can’t sell it to someone else. A tractor, however, although not so glamorous, can be sold for as much or more than you paid for it….it’s an asset.
So what’s the Real Estate market like now, in my opinion?
Well, we’re not in the COVID Real Estate market any longer, despite COVID still hanging around. This market, which often saw huge price increases in home values, open houses with 50 sets of people bidding up prices, and record low interest rates (the lowest of all time), has ended. It was a great time to sell a house, assuming you had somewhere else to live, and a rough time to be a buyer. This was because the federal government and the Federal Reserve, to keep the economy from going into recession during the pandemic, sent out lots of money to people and businesses affected by COVID, and kept interest rates extraordinarily low. The result was we avoided a recession, but inflation came roaring back.
To combat inflation, the Fed has now increased interest rates, which actually has us in a more ‘normal’ real estate market. In fact, the market now is still good for sellers, because home prices don’t come down as fast as they go up, and even more so, because demand for homes in our area is increasing. Families are looking for good schools, safe communities, recreation opportunities, and reasonable prices, and compared to Boston and its environs, central Massachusetts offers what people want. Surprisingly, even Worcester is doing better, with many new restaurants and other offerings a city can provide, and being close but not in a city is often desirable.
The market for buyers is now much better than it was during the COVID market. Although interest rates are up, they are still historically low, while the mad rush to buy houses has passed. I can’t imagine anything more stressful than having been a buyer in the COVID market. Prices were skyrocketing, open houses were jammed, and the listing price was almost meaningless other than a starting point for bidding up the price. Now buyers can be more selective.
Overall, I’d say that the crazy days of the COVID real estate market are over, and that we are now in a healthier, more normal market. Interest rates are still historically low, people still need to buy or sell their houses, and there are still plenty of potential buyers out there. We’ve returned to a good, rational real estate market that will remain steady and healthy as long as inflation is brought under control.
So, in a nutshell, we are back to basics–if you are looking to list your house, you need to present, stage, price and market it in the best possible way, to get the highest possible price. If you are buying, you need to know what you are doing, what you want, and what you can afford. In either case, buying or selling, an experienced real estate agent who puts your needs first is a must.
Addendum: As luck would have it, just before sending out my opinion on the current real estate market, the Fed (the Federal Reserve) made a major announcement today (2/1/23) on interest rates. It’s something of a mixed bag, but generally it’s a positive development.
The Fed announced a quarter point interest rate increase in their short term benchmark rate, from 4.5% to 4.75%, which is the highest level in 15 years. So why is that good news for home buyers and sellers? Well, in my opinion it’s more neutral and only slightly positive, but it’s definitely not bad. The way this announcement is being interpreted is that the rate increase was small compared to what the rate hikes have been, and that the Fed considers inflation to be moderating, while employment is remaining strong. A few developments that are helping to bring down inflation are the supply chain finally flowing smoothly, regular gasoline prices at the pump down to about $3.50 from a high of $5.00, and even things like used car prices are finally moderating.
The way I personally interpret this announcement today, is that the battle to get inflation under control, and hence mortgage rates down, isn’t won yet, but the signs are looking better than they have in quite some time. And even though the Fed has raised interest rates a bit, it doesn’t directly impact mortgage rates. In fact, lately rates have been drifting down. My guess is things are going to remain pretty much as they are now, but we appear to be slowly heading in the right direction. It’s like when you get stopped at the top of a ferris wheel….you are out there rocking back and forth a bit, but you (and inflation) aren’t going up any longer, and soon should be heading down.
The above is strictly my opinion. Please reach out to me by text, email or phone if you have any additional questions, or if you’d like me to do a current analysis of the range you might expect to sell your property for in the current real estate market. You can contact me by phone/text at 9788709260, email me at jennifershenk@kw.com, through the contact form or live chat through my website. Please visit my website to learn more and read my client reviews!
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