Happy New Year!

If I were to sum up 2022’s year in real estate in one word, it would be: Drama!

2022 started off with smashingly low interest rates, triggering a real estate pricing boom that set the record for highest property values in history. By the end of the year, though, interest rates swelled to more than double what they were at the start of the year, causing the real estate market to practically stop dead in its tracks.

The affordability of home purchases evaporated seemingly overnight, while home sellers found their property values in a free-fall, and the market left everyone wondering where the level of equilibrium would land.

Certainly, the impact of home values is felt throughout the divorce process, as parties and courts are deciding whether to keep, sell, or buy-out. Further, the question of when to do any of these things can impact the value of the marital estate by tens or hundreds of thousands of dollars.

Rates took their most sudden and drastic turn just as we were about to enter the start of the slow season in real estate — late summer / early fall. Then we had the high-profile midterm elections that kept uncertainty levels high, followed by the holiday season. For all of those reasons, we welcome Q1 of 2023, because we can hopefully get a clearer picture of what lies ahead now that much of the dust has settled.

Here’s what we know:

• Mortgage rate increases are subsiding: Rates peaked in November, and have receded since. (Click here to see the Federal Reserve’s 30-year mortgage rate historical data.)

• Prices are in a state of flux: Nationally, median home prices peaked in June 2022 and have since dropped by nearly 10%. Yet, home prices are still up from last year. However, if prices continue to fall at this pace, YoY declines will start showing up in February.

• The number of homes selling plummeted: “In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” said NAR Chief Economist Lawrence Yun. “The principal factor was the rapid increase in mortgage rates.”

Local Trend in Prices:

Currently, our market is seeing a [Pick one: Downward, Upward, Flattening] trend.

Pricing Note: House values can fluctuate through the seasons. Spring is a different market than the fall; mid-summer looks much different from the end of the year. So in order to get an accurate reading as to whether or not prices have fallen or risen, we use the “year over year” barometer.

Local Days on Market:

Days on Market (“DOM”) Note: This metric will tell us how long it takes for homes to sell. This number is largely driven by supply and demand. An uptick in interest rates can cause DOM to increase; a drop in unemployment can cause DOM to decrease. All sorts of economic factors can affect this number, and ultimately, DOM affects pricing. When there are low days on market, prices go up; when DOM increase, prices go down.

Market conditions are constantly fluctuating. Values that exceed 90 days are likely no longer relevant. If you’d like an updated valuation, feel free to give me a call directly at [Insert your number] or email me at this address.

This Month’s Trivia Question (No Cheating!):

January’s Trivia: In what state was the most expensive home sold (for $173 million) in 2022?

Reply with the correct answer and I’ll buy you a cup of coffee!

Here’s to a new year filled with health, peace, and prosperity!