In every market, investors and homeowners alike are trying to get a sense of the top of the market. “When can I sell my home for the highest price?” “Is the market going up or down?” are questions I field from owners and investors all the time. Is it time to sell your Smith Mountain Lake Home? Although I don’t have a crystal ball, we may be at the top of the market this year.
Here’s why I think so.
While interest rates aren’t the end-all, be-all in determining real estate market direction, it is a factor that adds to the equation. Over the last year, mortgage applications have declined 52% year over year for refinances, and purchase applications are down over 12% year over year. As the linked article cites, buyers have just pushed through rate increases last year, but now they’re starting to pull back.
If rates continue to increase, and it looks like they will throughout the year, this will affect the demand for housing.
Since February 2019, there has been a 40% increase in the median home price in the Smith Mountain Lake real estate market. Coupled with an interest rate increase of 31.40% since January of 2021, homes have become much less affordable.
Inflation and Energy Costs
Inflation is at a level not seen since 1982. Everything is more expensive. Food, gas, travel, building materials, and good luck if you can drive a new car off the lot and not have to wait for months to have it delivered.
Natural gas prices have been increasing steadily since 2019 and spiking here and there to give a wake-up call to homeowners, tenants, and potential buyers.
As a result of inflation, the Consumer Price Index rose from 5.4% to 6% year over year.
While the economy is overall excellent, can it withstand the pressure of increasing costs? Over the last year, wages have only increased by .4%. Considering the CPI increased .6% over the same period, most wage-earning Americans effectively make less this year so far than they did last year.
So what’s this mean for the housing market in Smith Mountain Lake? In the near term, we could begin to see demand for homes waning, and when that happens, the supply of homes could increase. More supply and less demand could start to put downward pressure on home values. It’s just simple economics.
If you think it’s time to sell your Smith Mountain Lake home, it may be best to consider this your year to get that done before we see a reversal in the market, more homes for sale, longer on-market time, and a downturn in home prices.
I’ve been selling real estate in Smith Mountain Lake for over 40 years, and if you’re thinking about selling this year, please don’t hesitate to call me or simply click here for my contact page. I’ll respond personally and promptly.
Thanks for visiting!