As it is so often, local real estate these days is a tale of two markets. The affordable end shows signs of slowing, while the midrange is hotter than it was last August. A fluke, or an early sign that rising rates are having an effect on the most rate-sensitive end of the market? Prices have flattened over the past few months throughout the price range, but that’s normal for this time of year, so there’s no clear indication that more expensive loans have begun chipping away at home prices. My gut feel is that 5 percent mortgages have eliminated a group of buyers, unique to this boom, that might without prejudice be called “opportunists”: the first-time buyer with a lifetime history of zero interest in home ownership until a) rates fell below 4 percent, while at the same time b) rents were rising, just as c) the clouds of economic doom parted, at least in this area. Prior to 2012 buying a home here required—no, demanded—a burning desire to own your own home, and those without that desire either stayed out of the market or left posthaste. The slowdown at the low end may be another indication that things are returning to normal, or as normal as local real estate gets.
Next, a look at the month-over-month trend in sales prices per square foot:
Next, for historical context, a comparison of sales price per square foot between August 2008, 2012 and 2013:
copyright © John Fyten 2013