In February, Cassandra Small and her husband started house hunting in northern New Jersey, assuming they would have no trouble finding a three-bedroom house in move-in condition. Instead, they discovered there were few options, and they had lots of competition for those homes. One, in Wayne, N.J., received 35 offers. Their offer — at $100,000 over asking price — was declined.
“Everyone else is searching for the same exact things,” said Ms. Small, 36, a publicist whose wish list includes a primary bedroom with an en suite bathroom and an updated kitchen. “We’d look at each other, and I’d say, ‘Are our standards too high?’”
Will Prices or Mortgage Rates Fall?
Many real estate professionals are operating under the assumption that we’ve hit bottom.
The prevailing wisdom seems to be that prices will start to rise again as potential sellers who have held off on listing their homes decide they can’t wait any longer, and buyers become acclimated to the higher interest rates and come around to the idea of paying more. “You can only put those decisions on hold for so long,” said Rory Golod, the president of growth and communications for Compass.
That may have already started to happen in some places. While sale prices were down 4.5 percent in the Northeast and 5.6 percent in the West in February from a year earlier, according to the National Association of Realtors, they were up 5 percent in the Midwest and 2.7 percent in the South. The median sale price in Manhattan may have fallen 7 percent in February 2023, to $1.06 million, compared to the same time year ago, according to data compiled by Miller Samuel, but in Orlando, Fla., prices were up almost 4 percent, to a median of $358,000. In other cities, like Houston, prices remained virtually flat, falling less than 1 percent, to a median of $302,250, during the same period, according to Miller Samuel.
But even without a price increase, buying a house today is more expensive than it was a year ago, and considerably more expensive than it was before home prices rose at their fastest pace in history during the first part of the pandemic.
Buy a median-price home today, with a 20 percent down payment on a 30-year loan, and you’ll pay $1,808 a month in principal and interest, 23 percent more a month than you would have paid if you bought the same home a year ago, when the median sale price was $367,225 and interest rates were 4.42 percent.
If that depresses you, are you sitting down? That house you buy today will cost you 84 percent more a month to own than it would have if you bought it in March 2019, when the median price was $255,875, interest rates were 4.06 percent, and your monthly payments would have been a humble $984.