“How’s the market?” asks every homeowner I meet! And the answer every month is “It depends.=)”
Why is that? Well, depending on your position, the market can be great or not-so-great. Every month I will break down central Indiana’s housing market data, as well as key events happening locally and nationally, to help you make sense of what’s REALLY happening in our local market.
Read on to get a quick breakdown of September 2023’s real estate market happenings:
1. At the national level, the Federal Reserve decided NOT to change interest rates
The “Fed,” as it is commonly called, decided to keep interest rates at their current position, 5.25-5.5%, at its September 20th meeting. This means the average homeowner’s mortgage interest rate held steady at ~8%. Now, many factors go in to what your personal mortgage rate will be; it may be higher or lower than 8% depending depending on your debt:income ratio, your credit score, and the loan amount you take out compared to the value of the home you are purchasing. Overall this is good news for buyers and sellers; buyers will most likely not have a big change in their interest rate from pre-approval to closing while sellers can expect a similar pool of buyers that are in the market compared to previous months.
2. At the national level, there has been an increase in jobs during the month of September
Data received from employers shows that over 300,000 jobs have been added compared to August with an unemployment rate at 3.8%. This shows that the American economy is still growing and employers are actively hiring. With average hourly earnings up 4.2% compared to last year (September 2022), this means that buyers have more buying power as their wages increase with the increase in home prices. This is good news for both buyers and sellers as buyers have more options as their budget isn’t as strained and good for sellers who are looking for the most potential buyers.
The following local market data points come from the three infographics shown below:
3. At the local level, the median days on market remains ~15 days
This is a good sign that the market is still very active, with buyers and sellers motivated to move! When houses stay on the market, on average, for more than 30 days this can mean that there is a lack of buyers and/or that inventory is high in a particular area. An important metric that indicates if it’s a seller’s or buyer’s market in a particular area is to divide the active inventory by the number of units sold in a month. This tells us how many “months” of inventory are in a particular area. When calculating this metric using all of the inventory in Hancock, Marion, and Hamilton counties, we get 1.8 months; below 5 means that it is a seller’s market and above 7 means it’s a buyer’s market. So, we are clearly still in a seller’s market in our local areas.
3. At the local level, the median sales price is stabilizing
This again is a good sign that the market is settling down into a more “predictable” pace of growth. Real estate nationally, on average, grows 4-6% year over year. In 2021, that number ballooned to over 18%! In 2023, we are now back at ~4%. (Source: CEIC data)
Yes, sellers are not getting multiple, over list price offers anymore but, this improves the overall sentiment in the market as buyers and sellers can come to the table more willing to negotiate and compromise on the sale of a home. This, I believe, is the sign of a healthy market.
Finally, the above graph shows the average sales price of houses in the United States since 1963. I drew the red line which shows “steady” growth in the market; you can see key moments in time when prices dropped or increased sharply depending on economic events. What this graph shows me is that home prices are moving towards that red line, indicating that we are going back to a more “neutral” market.
Are you interested in a more personalized market analysis for your specific neighborhood? Have questions about the data presented in this blog post? Contact me for an in-depth comparative market analysis that will help you make the best decision when selling your current home and purchasing a new one.
