What is happening in the residential real estate markets for Madison, WI and Dane County? Find out in today’s market update.
Currently, we’re in a seller’s market, and we have been for quite awhile. In the greater Madison area, we have less than one month’s supply of homes available for sale. In Dane County, we have a little less than 1.5 months of supply.
But how does being in a seller’s market affect property values? Typically, a low supply of homes for sale does put upward pressure on pricing. However, since we’re only in February, most sellers haven’t turned their listings loose on the market yet. Most sellers think that the ideal time to list is in May or June, so we expect much more inventory to appear on the market then, normalizing it a little. At the same time, we also expect more buyers to enter the market then, as well.
What do interest rates look like? As of the time this video was made, Freddie Mac shows that we’re at 4.39% for a 30-year fixed loan. At 1:50 in the video above, you can 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 toward the end of the year. Freddie Mac forecasts rates to climb back up to around 4.7% this year, and by the end of the year, they expect rates 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. The early 80s were painful for all consumers in the market, as rates climbed well past 15%. Looking at this puts our current rate environment in perspective; even though we’re now higher than we have been in the past, 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 spells great opportunity for your homes to get sold. Given the crazy winter weather we’ve been having, most of the buyers 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 than later; data shows that March, April, and May are the months with the highest number of accepted offers on homes. Buyers will start looking for homes soon, if they haven’t already begun browsing online.
For buyers, interest rates are still low at the moment. However, my friends in the mortgage business tell me that a 1% increase in interest rates will raise your monthly payments by about 10%. Since mortgage rates are expected to increase this year, now is a great 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.