As interest rates rise, the real estate market slows down, and that’s what’s apparently starting to happen in Kansas City real estate and nationwide.
Homebuyers face higher borrowing costs than one year ago. According to mortgage buyer Freddie Mac, interest on a 30-year, fixed-rate mortgage averaged 4.53% in August, up from 3.89% at this time last year.
Nationally, this has translated to the housing market losing some momentum, as sales of new U.S. homes fell 1.7% percent in July, the second straight monthly decline, according to the Associated Press. Existing home sales also have slipped a bit over the past four months, the National Association of Realtors (NAR) said in a report. Existing homes sold at an annual rate of 5.34 million in July, which is down 0.7% from June.
The AP said there has been a shift toward more expensive homes: 60% of new homes purchased in July cost more than $300,000, up 56% from 2017. However, sales of homes worth less than $250,000 are flat or falling nationwide, according to NAR.
In Kansas City real estate — much like real estate across the country — the beginning of the year saw home inventories under the $300,000 price level at all-time lows, making it a red-hot seller’s market. Well, maybe not anymore.
Martin Taggart, lead listing specialist with Team Real Estate KC, said the Kansas City real estate market has gone through a remarkable change in the past three months.
Sellers may see their new listing sit a week, two weeks, three weeks with limited showings and no offers. Besides higher interest rates, Taggart said this is the result of millenials who found the market tough to break into earlier this year (while inventories were really low), deciding to rent for another year, which has removed a ton of demand. This has left sellers dazed and confused.
Currently, Taggart said, inventories are still low at 2.5 months under $300,000; they should be five months plus or minus. “Unless you are tied to a specific subdivision there are still options as long as you are willing to move and aren’t ‘waiting for a deal’,” he said.
Taggart’s advice to sellers in the current Kansas City real estate market? “Stay cool and find an agent who has a marketing plan. An agent who can explain exactly what you need within that marketing plan (depending on your list value) to get your home sold. Make sure that agent has professional photos taken, and have those photos shown to you prior to listing. The agent should include targeted keywords that reflect the narrative that works best in your subdivision, your price range and your zip code.”
Visit www.teamre.com for more information on selling your home, or buying a new one.