If you're wondering what's happening in the real estate markets for both Madison, WI and Dane County, you're in the right place. Read on for today's market update.
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At the moment, we're in a seller's market, as we have been for quite some time. In the greater Madison area, there's currently less than one month’s supply of homes available for sale. In Dane County, there's a little less than 1.5 months of supply.
Some of you may ask, how does a seller's market affect property values?
Generally speaking, a low supply of homes for sale puts upward pressure on pricing. However, since it's still early in the year, most sellers haven’t turned their listings into 'active' status to be shown on the market yet. Because most sellers think that the ideal time to list is in May or June, more inventory is expected to appear on the market around that time, normalizing it a little. However, we expect more buyers to enter the market at that time as well.
What do interest rates look like?
At the time of the filming of this video (last week), Freddie Mac shows that we’re at 4.39% for a 30-year fixed loan. When you hit 1:50 in the video above, you'll see a chart from Freddie Mac that shows interest rate trends over the last year. Rates spiked last November, climbing near to 5%, but trended back down closer to the end of the year. Freddie Mac predicts rates to climb back up to around 4.7% this year, and by the end of 2019, rates are expected to reach around 4.9%.
At 2:32 in the video, you can see another chart that tracks interest rates back to the late 1970s. For those of you who were around in the early 80s, you might remember they were painful for all consumers in the market. Rates climbed well past 15%! Looking at this puts our current rate environment in perspective; sure, we may be higher than we were in the past, but by no means are we in a high-rate environment. We’ve been somewhat spoiled..
So what does this all mean for buyers and sellers?
For sellers, our low inventory means perfect opportunity for your homes to get sold. With this crazy winter weather we’ve been having, most of the buyers who are currently in the market, are serious about purchasing a home. That’s why it’s a good idea to get your home on the market sooner rather than later. Our data shows that March, April, and May are the months with the highest number of accepted offers on homes. Therefore, more buyers will start looking for homes soon, if they haven’t already begun browsing online.
Even though interest rates are now higher than they have been in the past, by no means are we in a high-rate environment.
For buyers, interest rates are still pretty low at the moment. However, keep in mind that a 1% increase in interest rates will raise your monthly payments by about 10%, as my friends in the mortgage business tell me. Since mortgage rates are expected to increase this year, now is an opportune time to purchase a home. Additionally, if you begin searching now, you won’t have to compete with other buyers for a home quite as heavily as you might later this spring.
As always, if you have any questions about the real estate market or how current trends relate to your specific situation, feel free to reach out to us. We’re here to help.