Summer of 2023 may have been the hottest on record — but if you were trying to buy a home, it was icy cold. Many home buyers, especially first-time buyers, were frozen out of the marketplace because of high home prices and soaring mortgage rates.
The demand for homes in addition to limited housing inventory, has created a seller market unlike anything seen in recent memory and homes are selling for more money than ever. Good for builders and Wall Street investors. Bad for buyers.
New listings were down 22% from last year, and the total number of homes for sale was down 17%, marking the most significant drop in a year and a half.
Mortgage rates reached 7.23% on Thursday 8/22, up 2 percentage points from this time last year, making it the highest level since 2001. They spiked even as the Federal Reserve tries to curb inflation, making the dream of owning a home more unaffordable than ever.
On Friday, August 25, Federal Reserve Chairman Jerome Powell called for more vigilance in the fight against inflation, warning that additional interest rate increases may be on the way.
Median Price Of A Home
The median home sales price in the United States is $416,100 as of the second quarter of 2023. That’s down 3% from the first quarter of 2023 when the median home sales price was $429,000. But it’s still sticker shock.
Hawaii has the highest median home price in the country with a median home price of $732,000. That shouldn’t come as a surprise with the appeal of the Aloha State, which is often considered the most desirable vacation destination in the U.S.
That’s why Hawaii’s governor vowed to protect local landowners from being “victimized” by opportunistic land grabbers when Maui rebuilds from the deadly wildfires. There are rumors Oprah Winfrey and other celebrities want to grab more land on the devastated island.
Even though Californians are fleeing the state by the thousands, it remains second highest with a median home price of $684,800.
Florida and Texas, two states many people want to move to – have median home values of $390,052 and $301,763 respectively.
West Virginia is the least expensive state to buy a house, with a median home value of $155,687, according to the Zillow Home Value Index. West Virginia is among the states with the lowest living costs.
Why are new homes so expensive? One reason is the cost of building one through the roof. New construction can range between $100 and $200 a square foot. Lumber prices alone add about $36,000 to the price of a new home.
The main factor behind the rise of mortgage rates is Inflation, the size of the national debt, government spending, and other poor fiscal policy decisions that have contributed to upward pressure on mortgage rates. No matter what Fed Chairman Powell tries to do, inflation remains stubbornly high.
Thankfully, the dog days of summer are over. What will it be like in the fall? The housing market will still be a seller’s market. Home prices might stabilize but mortgage rates are predicted to inch upward. In other words, Winter will come early in 2023.
The big question is – will the housing bubble burst like it did in 2008? With inflation soaring, high home prices and interest rates, soaring building costs, and no solution in sight, we think it’s only a matter of time.