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Inflation was the main theme of 2022 in the local real estate market as well as nationally. The Federal Reserve’s response to inflation was to increase interest rates at each meeting in 2022. The rate increases caused mortgage rates to double and in turn increase the monthly payments on new mortgages. As you can see from this chart, interest rate increases starting in March had an effect on the local market.
Let’s look at a few graphs to see how that effected the local market through out the year. These graphs represent the Fort Walton, Shalimar, Mary Esther area.
Homes sold relatively quickly in the beginning of 2022 in fact faster that in 2021. Average Days on Market trended up during the second half of the year but stayed under 40 days. This shows that a well priced and marketed home sold quickly. In the next chart we can see how inventory contributed to the increase in days on market.
Months of inventory is a measure used to determine the health of the market and wether it is a seller’s market or a buyer’s market or a neutral market. To calculate the MOI we take the total homes for sale divided by the average number of homes that have sold per month. As you can see, the MOI has increased significantly since March 2022 indicating that we started turning away from the Seller’s market that we saw through out 2021. The inventory of homes on the market increased from 167 in January to 366 in December.
Sold Price/Sq Ft is a measure we use to price home of similar quality but differing sizes. This is a useful when determining how average prices are moving. In 2021 the Price/Sq ft increased steadily through out the year as the market heated up. This continued into the first few months of 2022, but we saw a drop after April when prices declined and then leveled out. This shows that buyers were better able to negotiate prices in 2022 and seller’s adjusted prices due to the increased inventory and competition.
The role that interest rates play in real estate is huge. When the Fed decided to increase rates this year the real estate market responded quickly. Smart agents and seller’s recognize the state of the market and price their properties correctly to get the highest price possible in the shortest times. Seller’s and agents who ignore the state of the market and price too high will end up with properties on the market longer and multiple price reductions. Cash buyer’s will have an advantage in this market as they can take advantage of the lower prices without the worry of interest rates increasing their monthly payments. If you are looking to sell, give us a call and we will evaluate your home’s value and put together a marketing plan to get your home sold. If you are looking to buy we can guide you through the process and use our knowledge of the market to get you the best price.
Brian Burger 850-461-0804
Dawn David 850-974-9475
