What’s going on in the housing market this week? There are many different “takes” on what direction the housing market is going.

When it comes to what’s happening in the housing market today, some see the signs of an economic housing crash. Others see something that could lead us in that direction, where prices fall from under us.

Do we think that’ll happen? Our answer is "not likely." Here are five major facts you need to know about our housing market today. Let’s dive in. 

1. Inventory, interest rates, and buying power influence the Delaware housing market.

There are so many factors at play here. The monthly payment is also a huge factor. If you think no one is buying, think again. How can a 2–3% price drop cause a market crash? 

Everyone is waiting for this non-existent impending market crash so they can snag a great deal. But, instead of waiting for the lagging effect to happen 2–3 months later, smart people will take advantage of these 1–2% drops and buy their house before anyone else. 

2. The spring market will determine if the prices bottomed out.  

There are two theories about the direction of housing prices in the market: one suggests prices will continue to drop 3-6%, and the other suggests prices have already bottomed out. That we've seen the lowest we're likely to go, on average, is more plausible. 

After the spring market, we think we'll bottom out. We're all talking about buyers coming out of hiding, waiting for prices to drop, and waiting for everyone to list when we have all these buyers, so we think the housing market is about to become saturated again. Inventory will be sufficient but not excessive.

So, we'll see homes on the market for 30-45 days; we'll see a lot of price reductions, and the drop will not be drastic; it'll be around 1-3%, but that could be the last push as far as these rate times go for the buy. 

3. The average price point in Kent County still sits above $300,000. 

As of this week, the average price point in Kent County is still above $300,000. So that takes us to average monthly payments of $1500-$1700. 

4. Delaware homes sold faster in the last month. 

Delaware home sales have accelerated recently. Interest rates have dropped, and we're now hovering in the low 6% range. It's been a few weeks, and the lack of volatility is giving consumers and homebuyers the confidence to go for it. We're getting more people lining up and saying, "Hey, this monthly payment stinks for now, but I'm not getting any younger, and the housing market isn't getting any cheaper, so I’m going to get that deal.”

Buyers want a low price, a home that will sit on the market for a while, and a good monthly payment. You can’t get all three. 

There’s never been a time when all three were available. Looking back, you’ll see that the housing market just got more expensive, interest rates went up, and inflation went up. That is why we always say that the housing market has been a good investment for any 3- to 5-year period in US history. That stands now; that stood two years ago, and it will stand five years from now. 

5. The rental market is getting expensive because homebuilders are on the safe side of profit. 

From the midpoint of 2020 up to 2021, two different things have happened. First, prices started to decrease slightly, affecting the margins on which the home builders were building. Second, they went into these big logistics issues that started to happen because of COVID.

New construction is becoming more difficult. Building at margin and scale without knowing what the market will do in the future is scary. This is why they’re building neighborhoods that will be leased and rented out; they are not selling homes. They’re selling the townhomes because they’re cheaper to build, but the single-family homes? They’re leasing them—for ridiculously high prices.

If you’re still in a place right now, when you look at the cons of not owning, it's a crazy rental market you've got to get into. If you can find a rental, that's fantastic, but they're becoming increasingly difficult to find, and home prices are falling, particularly in Delaware.

In that scenario, you’re better off buying a home than looking for a rental home.

Final Thoughts

All of this information is a lot. If you ever have any second thoughts or questions or want to reach out to any of us, our ears are open. Now is the time to start thinking about it, and savvy home buyers and sellers are starting to converse with their trusted agents. 

If you're looking to move after the school year, thinking of selling in a spring market, or upgrading as the new year begins, or even if you're trying to buy next year and want to know what's the best way to get started, call us if there's anything you need in the realm of home buying and selling. 

Like always, we'll be here next week for our weekly housing market update. See you!