Housing Market Updates
With interest rates going up and housing prices still increasing, it seems like the perfect time to share an update about the Springfield area housing market. Afterall, “what’s happening with the housing market” is easily one of the most common questions I get asked. That and, “Should I sell my home right now?”
Speaking of question No. 2, if you’re reading this and wondering if you should sell or buy right now, the answer is yes—to both of those things. I’ll explain more, but right now let’s dive right in.
Interest Rates
First of all, I think it’s important to talk about what a normal interest rate is. It’s anywhere from 4%-6%. I know that seems high compared to the nearly 2% interest rates we all enjoyed last year, but in a balanced housing market, you can typically expect a 4%-6% interest rate. So now that interest rates are hovering around 5.25% once again, do not panic. That is actually a sign that the market is trying to balance itself and return to somewhat of a normal market. Now, what normal looks like is a different conversation.
Secondly, 5.25% is still historically low. Back in the ’80s, interest rates were up to 18% due to inflation. Freddie Mac actually has a chart that goes back decades where you can see how interest rates changed each month. In 2018, interest rates were at about 4.5%. In 2008, they hovered around 6%, and in 2000, interest rates crept above 8%. So don’t feel stressed if your lender tells you your interest rate will be somewhere around 5% these days.
Local Prices
It’s no secret that housing prices in the Springfield area are up—big time. In fact, they’ve increased more than 30% since 2019. That’s good news if you’re a seller. More than likely, your home’s value is way up. Now if you’re a buyer, that 30% could seem like a pretty good reason to put off buying a home. Here’s my advice: do not wait for prices to drop. I really don’t believe we’ll see housing prices go down much, and here’s why.
There are still more buyers than there are homes available. Interest rates are still lower than they were 20 years ago. And to be totally honest, I would not be surprised if the housing prices in our area continued to go upward. So if you find your next dream home, make an offer! Chances are, the price of that home will increase in the next two to three years.
Market Crash
I get asked all the time if I think the local housing market is going to crash. I don’t have a crystal ball, and I could always eat these words later, but I don’t believe we’ll see a crash like we did in 2008. Part of that is due to the fact that in 2008, many homeowners didn’t have a fixed interest rate. So when interest rates jumped, suddenly their mortgage payments were a whole lot more expensive. Today, almost all home buyers are looking for mortgages with fixed interest rates. And to reiterate we are still seeing many more buyers than homes available so the demand, even with higher prices and rates is not slowing down.
That’s it for now. In a nutshell—interest rates are up but still low compared to 10+ years ago, the local housing prices are way up and will likely continue to increase, I don’t see a drastic market crash on the horizon in the 417 area, and finally, it you’re eager to sell, now’s a good time. And if you’re looking for your dream home, don’t be scared off. Just be patient and make sure you have a strong realtor and reputable lender working for you.
