You’re likely to have heard that the real estate market is shifting. Between 2020 and 2022, we saw a combination of historic lows in mortgage interest rates, paired with historic highs in home prices. This was undoubtedly a result from the COVID pandemic as interest rates plummeted, creating a higher demand for homes, which in turn created a lower inventory of homes available to purchase. There are few things certain in life—and one of them is change. Change is inevitable…and it’s not always a bad thing.
As mortgage rates begin to rise, it’s easy for some people to shout that the sky is falling. And while it’s easy to look back at the past and try to find similarities in the 2008 housing crash, it would be unwise to do so. Foreclosures (as of Quarter 3, 2022) are nowhere near 2009 levels—they’re actually still lower than pre-pandemic foreclosure numbers, even after the government’s foreclosure moratorium ended.
2021 gave us all-time lows in mortgage rates. And, although rates have doubled since then, remember that (as of today, 1/19/23) rates are still below the historical average of 7.81. Mortgage rates are leveling out.
As for home prices, the long-term average is a 4% increase. 2021 and 2022 showed us a higher than average increase, which means, at some point, they will come back down to numbers that we have come to expect. Home prices will start leveling out.
What does that mean for the future of real estate around Louisville, KY? Leveling out is a good thing. Historic highs and lows are unsustainable, and getting back to more “normal” rates and numbers is not only inevitable, but is something that many people are eager to do after the unpredictable nature of the last few years. The Louisville market did not see the extreme price increases that other markets experienced, thus our leveling out will also be less extreme. If a new home or real estate journey is on your agenda this year, contact me today and we can talk about what this means for YOU!
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