This is a local price update in response to a recent Bloomberg article published on 10/03/2022
Did you see the news?
Today, Bloomberg published an article acknowledging that national home prices have seen the steepest decline since 2009: -2% since July!
Now, this headline was meant to do two things: First, catch your attention by telling you home prices are falling, and second, scare the reader by mentioning a year that is associated with the most recent housing crisis.
What is really means:
This 2% decrease is a national number, and is therefore skewed. Markets in the Western US, for example, are seeing price decreases of up to 11%. That number alone is pulling the entire average down, and affordability issues are hurting the entire region.
Also, month-to-month price changes in the housing market are not always an accurate representation of what's happening at a macro level. For example, we typically see prices decrease seasonally in the summer and winter due to a decrease in activity. We definitely did last year.
It's true that homes everywhere are far less affordable than they were even just at the beginning of the year, and you can't ignore that. The recent rate hike put mortgage rates at 6.7% for an average 30 year loan. Affordability in all regions is the worst it's been in 30 years when you combine those rates with record high home prices.
With that said, paying attention to your own region, state, and city are crucial in this current market. That brings me to my good news, which is that median home prices in the Midwest, Michigan, and metro Detroit, are actually rising slightly.
Home price in our Metro area rose 1% since July, and in some cities even rose 7%. Those higher numbers could be due to a lack of sales in the area, which would skew that number if only higher priced homes had sold that month. Still, a 1% rise for the whole area is much better than a 2% decrease.
The takeaway (TL;DR)?
Metro Detroit and the midwest are still a competitive seller's market for the time being. Affordability will eventually catch up with us, but right now this is still one of the more affordable areas in the country, and we aren't being affected the way more inflated markets are.
My advice if you're renting and thinking of buying? Compare your current and future rent costs to a mortgage payment, and see which is cheaper. If you're planning on being in a certain area for 5+ years, I'd probably still take the higher interest rate and buy something. At the end of the day, you're going to be paying somebody's mortgage, so it might as well be your own. Buying something you could easily rent out? That's a bonus.
My advice if you're thinking of selling, weigh whether you need to or not. Housing is unique in the sense that it's an investment, but it's also where you live. You can't live in your IRA, stocks, or money market account, but you will always need a roof over your head. Unless you live at home with your parents, you're paying to live somewhere regardless of how it's financed. If you're comfortable where you're at and have locked in a low interest rate, it doesn't hurt to sit on your equity and see where the market goes in a few years. But, if you're relocating, need to downsize, need an extra bedroom, etc. don't wait. The market is still leaning in your favor, and "yesterday" is always the best time to have bought your next house.