The Fed acted March 16, raising the rate tied to all borrowing, in an effort to fight inflation.
And just like that, the hot housing market started to cool.
Reality hit hard and fast. Buyers who were focused in out-bidding competitors for a home were shocked to call their lenders to find that mortgage rates had risen to 5% and more.
So that $300,000 mortgage at 4% that translated into a monthly payment of $1,432 in principal and interest rose to $1,610 at 5% interest.
In a few short weeks, the ripple effect showed up in market statistics.
Shortly before the rate hike, there were only 108 single-family homes on the market in Spanish Fort, Daphne and Fairhope. Now the Eastern Shore inventory has almost double, rising to 191 homes for sale.
Some buyers who were struggling to qualify to buy have been locked out by the higher mortgage rates.
One volume builder has started offering incentives to buyers and Realtors again.
And homes in some price ranges are sitting on the market longer.
Last week, the Fed again raised the rate. On May 10, rates on a 30-year mortgage were around 5.5% plus.
This will all have to play out, but my Realtor colleagues, who long ago soured on this market, believe it will be a good thing in the long run, though it may be a bit painful. Here’s what they anticipate:
n More inventory.
n Longer days on market.
n Fewer bidding wars.
n More balance between buyers and sellers in negotiations.
n Moderating prices.
n A general loosening up of the market that may allow sellers to buy up or downsize within the market without having to go into temporary housing in the interim.
In other words, normalcy.
Make no mistake, demand is still high and supply is still extremely low for the Eastern Shore market.
But for the first time in many months, inventory is up and the number of homes under contract declined between the first part of April and May, one of the hottest selling times of the year.
On to the numbers:
s for sale:
191, up from 133 the first week of 154 in early March and 172 in early February.
Spanish Fort s for sale: 21
Daphne s for sale: 66
Fairhope s for sale: 104
Total: 455, down from 493 in early April and 498 in early March.
Spanish Fort: 89
Closed for April :
Total: 223, down from 292 in March.
Average price: $443,077, up from $431,070 in March and $407,521 in February.
Median price: $365, up from $362,119 in March, and slightly down $366,195 in February.
List-to-sale percentage: 98.6%, from sellers getting on average 99.2% of list price in March.
Spanish Fort: 33