As I'm sitting here writing this market update, I just got a push notification that "the fed raises interest rates another quarter point in ongoing inflation battle" (MarketWatch.)  I guess this is a sign from above that my first topic on this month's market update will be about interest rates, and I'm going to closely follow this by showing you real proof that buyers don't care. I said what I said.

Ok- so rates started out this week at 6.69%, and as of this afternoon (Wednesday 3/22/23) I'm thinking they are going to hover right around 7%. Remember, the Fed keeps raising rates to hedge against inflation, and it's working. It's just a painstaking process that really sucks for borrowers. But here's the thing with interest rates: either you're going to pay more on the house when rates are low (plus contend with multiple offers, forfeit your rights for inspections, and likely pay way over asking price, while sacrificing half your wish list, just to get into something.) OR you're going to pay less for the house when rates are high, have more inventory (houses) to choose from, less competition (other buyers trying to purchase the same house) and have way more leverage when it comes to negotiating seller credits, concessions, repairs, rate buy-downs and more.

To wrap up this hill I'm dying on, if you can swing the monthly payment, get the house. The key to real estate success (or "hedging" the market) is to make savvy, albeit boring, choices. When rates come back down and normalize, refi into a 15 year at a much lower rate. Why a 15? Well, you're already used to a high payment so stick with it. Leverage the lower rate, keep the payment somewhat the same, and pay off your home in half the time. Man, I should get paid for all this amazing real estate advice. Oh wait…I do! 😏

Moving on to the part where I give you tangible proof that buyers don't care about interest rates. Just in the last week alone I've come across some fascinating discoveries just in my own little world of selling real estate in Central Florida.

• New Construction: Orlando Home builders are insanely busy right now. One sales rep told me he hasn't had time to eat his lunch in weeks. I've visited several new construction communities in the past couple weeks, and I have to say, I see where he's coming from. It's like a revolving door of people in and out, touring the models, sitting down with the sales reps, and getting homes under contract. I've seen instances where an inventory home for sale in Orlando was available, and within two hours it's off the market. Why? Well builder incentives are super good right now, and even include rate buy downs. Builders seem to be cranking out Orlando homes for sale at a steady rate, insurance rates are the cheapest on new construction, plus builder warranties and everything shiny & new, I totally see the appeal. If you want to buy, but are short on cash to bring to the closing table, new construction needs to be on the forefront of your radar.
• Resale: My sales manager told me just this past week in Oviedo, a fellow Realtor held an open house for a listing with a price point of about $700k. It was reported that over 100 people attended the open house. Even in the peak of the 2021-2022 chaos, 100 people in a single open house would have been pretty insane (but we all saw it.) Homes for sale in Oviedo come at a premium, and it's looking like that's not changing anytime soon. And remember, 100 people at an open house mean multiple, over asking offers, bidding wars, and more money in the seller's pocket.

So what does this tell me? Buyers are buying. They aren't letting rates stop them. Even in higher price points, where we typically see slower movement, we're seeing hoards of buyers ready to jump. There are 140.2% MORE houses on the market right now than there were this time last year.

I don't know about you, but if you told me I could either pay $300 less on my monthly mortgage (in the form of a lower interest rate), but I had to sacrifice most of my home wish list, OR I could pay $300 more on interest but I got everything I was looking for, I wouldn't even blink an eye. You spend your life in your home- it should have the features you want. (And I don't mean paint colors and hardwood floors people, I mean things that are hard to change like a pool, 4th bedroom, Florida kitchen, etc.)

Here's where things get interesting: We had 6,115 active listings in January. February's data is showing only 5,555 active listings; that's a -9.2% change. Seller's aren't selling. In January, we had 1,674 closings, compared to 2,240 closings in February- that's a 33.8% increase in sales. Buyers are buying! In January, we had 3.65 month of inventory, February showed only 2.48 months of inventory. Seller's aren't selling, and buyer's are buying.

This kind of reminds me of Disney World. Disney keeps raising their prices in an effort to reduce the number of human beings in the parks on any given day, and it's completely backfiring. I don't know if you've been to Disney lately, but it's insanity. The higher priced tickets, lack of Florida Resident annual passes, weird lightning pass rules & inoperable Genie app, aren't stopping people. Higher interest rates aren't stopping buyers.

Buyers: Get in now while you still have room to negotiate and get the house you want without multiple offers, and the hassle of selling your soul in the process.

Sellers: It's time to start making preparations to sell your home. The homes in the best condition, priced perfectly are quite literally getting 100 people to show up at an open house.

I'll leave you with a few pieces of data below:

Average home price in Orlando: $438,375

Inventory: 2.48 months of Inventory in Orlando

Average days on Market: 62

Send me a message with your real estate questions. I'm an open book!