Median home prices have seen a slow and steady decline since the peak value point of $212,000 at the end of July. That is until November. As of the end of October, the median home price for the Shawnee Mission area was at $197,000. November’s numbers, fresh off the presses, show that although demand is down, median home prices have seen an uptick. The latest numbers reveal that the current median home price as of the end of November is $205,000 which is up 4.1 percent from the previous month.
How is this possible with lessening demand? Most likely, there have been some homes selling in higher price ranges, which has brought the median number up. Nevertheless, it is good news for sellers out there that the market is fighting to hold on to today’s record high values.
The real test for how resilient today’s values truly are will come when we see a noticeable increase in mortgage interest rates. The only reason today’s values, which in many cases are higher than the peak values in 2006, have been tolerated by buyers out there is because the cost of money (interest rate) has remained so low.
The Fed’s next meeting to discuss raising the federal funds rate is scheduled for December 13-14, 2016. US News and World Reports recently wrote that “Fed Chair Janet Yellen and several of her colleagues have indicated as much in recent days, with Yellen saying during congressional testimony last week that an increase to the central bank’s benchmark interest rate “could well become appropriate relatively soon.” It is stated in the article that the fed spoke of the domestic economy saying it has “expanded at a faster pace in the third quarter than in the first half of the year,” including a labor market that had “continued to strengthen” and inflation that managed to “increase somewhat since earlier this year.”
A second contributing factor to pricing will be the current pattern of lessening demand. As you can see from the graph, the percentage of homes each month that are going under contract has been dropping steadily since the peak in April of 51.3 percent. The absorption rate for November ended at 18.3 percent, which compared to November 2015 is down 35.6 percent. To give that number some life, of the 774 homes that were for sale at the end of the month in the Shawnee Mission School District footprint, only 142 of them went under contract. The absorption rate in December of 2015 was higher at 23.5 percent.
As a potential seller, if the amount of equity that you receive is important to you, time is of the essence. Although we have seen a temporary increase in the median sales price, it is most likely just that…temporary. Call us or email us today to discuss how we can create a strategy to ensure that you maximize your equity potential.