After peaking in the fall near an average of 7 percent, interest rates have fallen back into the 5 percent range in some cases, bringing first time home buyers out of hiding and tempting current homeowners to go ahead and make the move to their dream home before rates go back up the way many experts say they may.
After increasing 8 consecutive months, the months supply of housing (inventory) dropped considerably in January and currently stands at about 2.1 months in the Augusta market. Add in the fact that there are approximately fewer homes listed in MLS as of this post than one month ago with more homes sold in January 2023 than December 2022, and there has clearly been a recent uptick in demand for homes in our area. That demand has also brought an uptick in home prices for the Augusta market.
The average price of a home continues to rise as well. Not only were January 2023 prices higher than December 2022, but they were also up 4.19 percent over January 2022 when interest rates were still below 3 percent. Columbia County saw home prices spike 16.57 percent year over year in January. Not to be outdone, North Augusta home prices continued to increase at pandemic era rates with a nearly 20 percent jump!
These stats do not take into account seller paid closing costs and other concessions buyers are often able to negotiate like home warranties and such that were unheard of a year ago, but we are still a long way from being a buyer’s market in Augusta. In fact, a current client lost out on a property just today, because there were FIFTEEN offers on it!
Understanding “why” we are experiencing the recent local uptick is key to gaining some idea of what the future may hold for our real estate market. Unfortunately, I think these robust January stats were driven largely by the recent dip in interest rates; however, there may be a little more to it than just rates. For example, the Augusta economy is historically more resilient during recessions than other parts of the country. This is mostly due to the presence of Fort Gordon and the stability it brings to the local job market. This was absolutely true during the Great Recession of 2008 when our market faired much better than other parts of the country. This may have been because unemployment was not quite as bad as the national average, and as long as people have jobs, they can typically afford a home, or at least not lose the one they already own the way so many Americans did.
When it comes to investing, conventional wisdom is to “buy the dip,” or buy low/sell high, right? This is largely what is happening right now. I haven’t talked to anyone who thinks 3 percent interest rates are coming back anytime soon, but I think we can all agree that 5.5 percent is better than 7, so why not buy the dip before rates go back up?
Add in the fact that local home prices are not just stable, but actually increasing of late, and buying a home in the current market doesn’t seem quite so scary. What do you think? I would love to know your thoughts, so leave me a quick comment below!