There is extensive talk throughout Springfield regarding the rapidly changing housing market. Many across the city are expressing concerns about difficulties for the average Springfield resident to buy a house.
But, there could be a glimpse of hope for improvement in Springfield’s housing market, at least for home buyers.
Over the last couple of months, the number of homes for sale in the area have remained relatively the same, but Greene County began to see a decrease in the median sales price in August and September. Data is not yet available for October.
Jeff Kester, the CEO of Greater Springfield Board of Realtors, says this might be the return of seasonality in the market.
“This year is not as unusual as maybe the last three years where we haven't seen those seasonal differences that we normally do,” Kester said. “Now this year, of course, we have the additional headwinds of 8-plus percent inflation and 7-plus percent interest rates.”
How much did the prices fall?
For the first time since January, home prices have steadily declined. In May, the average cost of a residential home in Greene country peaked at around $270,000. In August, this median cost dropped down to $230,000, and in September, it decreased further to $227,000.
Over the last year, average home prices had increased. As of September 2021, the median sales price was $204,000.
This is a trend that’s reflected nationally.
Although prices appear to be coming down, buyers are now facing higher interest rates. Nationally, the average interest rate on a 30-year mortgage is 7.08 percent, with Greene county’s rate slightly below at 6.8 percent. That’s up from 4 percent this spring.
Despite rising interest rates and falling prices, Kester said he’s not worried about a housing crash.
“It is definitely not 2008 again by any stretch of the imagination,” he said. “If you are a potential home buyer and you're kind of sitting on the sidelines waiting for the big price adjustment or the crash or the bubble to burst or however you want to put it, it’s probably not going to happen.”
That’s because additional factors that have contributed to the competitive housing market still exist, Kester said, such as ongoing supply chain issues and the national labor shortage. Coming out of the pandemic, the demand was high enough that builders were unable to find materials and workers at the pace necessary. Although there are efforts to mend the housing shortage throughout the country, these efforts may not be felt for years down the road. Since 2021, there has not been significant improvement in the supply chain and workforce issues.
“We still have exceptionally low supply,” Kester said. “Even nationwide, the supply numbers still went down a little over two percent. So as long as that happens, it will take stronger headwinds to really make a huge difference. When you're talking inflation, you're also talking material prices. So when new construction prices go up, that means existing prices typically go up.”
The Greater Springfield Board of Realtors predicts that local home prices will not increase substantially until January.
There are some contrasting viewpoints on whether now is a good time to buy at the national level.
Clare Trapasso, the deputy news editor at Realtor.com, wrote in a recent advice column that “most people probably shouldn't be buying a home in today's market.”
Kester, however, disagrees.
“You're probably being a little bit more discerning,” Kester said in response. “But again, sitting on the sidelines is not the answer.”
