Many different markets are feeling the uneasiness of the U.S. economy, as they have for many months now, and the housing market is taking the biggest hit. The number of homes for sale decreases while interest rates increase rapidly.
Home sales dropped to a 13-year low in the United States since the interest rates rose above 7% in August 2023, CNN reported on October 19, 2023. According to Forbes, the mortgage rates hit a 23-year high at 7.79% at the end of October, though they have since eased back down to 7.44% as of November 16. However, 7.44% is a big difference from the 3% interest rates the market boasted just two years ago.
U.S. vs. Monterey Housing Market Trends
According to RedFin, the median home sale price in the United States for October 2023 was $413,874, which is 3.5% higher than last year. However, only 12 of the nearly 400,000 homes sold nationwide in October were sold in Monterey, CA, RedFin reports.
Even in a city with a high socio-economic status, such as Monterey, home prices are skyrocketing. The average October home sale price in Monterey comes in at just under $1.28 million, which is up a whopping 18.6% from October 2022, according to RedFin reports.
The Monterey median home sale price of October 2023 ranks as the second-highest median price since October 2020. Only January of 2023 surpasses October’s median sale price of $1,335,000. However, while the median home sale price is up nearly 20%, the number of homes sold in the city was down 33.3% year over year.
While housing prices have steadily increased since 2020, the number of homes sold each month is on a downward trajectory. This is true for both the nation and Monterey, CA.
What Happens Next?
Based on the data above, people are moving less as housing prices continue to increase. It seems that people are only moving out of necessity, as most mortgage rates are 6% or under. No one wants to move and get hit with a 7.44% mortgage rate if they don’t need to.
Moving companies are on high alert with the residential housing market slowing down. At the Wheaton Bekins Van Line Conference held in early October 2023, company president AJ Schneider predicted this national housing market lull to last well into 2024, if not into 2025.
There is a glimmer of hope with the 30-year mortgage rates decreasing slightly from October to November. However, prices are still on a steady incline with supply so low. Moreover, if you need to move within the next year and a half, you’ll likely get a more affordable price if you purchase your home sooner rather than later.