CRYSTAL BALL AND OUIJA BOARD TIME? WHERE ARE HOME PRICES GOING IN CHESTER COUNTY?
What do the indicators say about the direction of home prices in Chester County?
It doesn’t have to be done with a crystal ball or Ouija board. There are market indicators that can give us clues.
First of all, what has happened to median home prices over the last five years? Median sales price has gone up a lot in the last five years, from $399,000 to $543,396, or 36%. Can we expect to see that happen again over the next five years? Probably not.
What then can we expect to see? Other indicators of price direction are mortgage interest rates, inventory available for sale, cumulative days on market (how long does it take to sell a house).
Mortgage interest rates doubled in the last year from about 3% to over 7%. Principal and interest payment on the median priced house ($540,000, 5% down) are up by $1,250 a month ($4,860 from $3,610). That is surely a downward pressure on prices.
Another good indicator is how long does it take to sell a house. In Chester country, the median days on market are still about 7. That is very bullish for prices.
Inventory levels are still really low. Anything under 7 months of inventory indicates there are more buyers than seller which is an upward pressure on prices. Right now we are at 3 months of inventory.
Interest rates would say that prices will be coming down. Inventory and days on market say that prices will be going up.
For now I am going to call it a draw and way that I do not see any appreciable decrease in home prices. Only time will tell and I will keep you posted.
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No doubt, the housing market is shifting, and it can be a confusing place right now. Let’s connect so that I can help you make confident and informed decisions about what’s happening in our market. Don’t let fear or uncertainty change your plans. If you’re unsure about where prices are headed or how to make sense of what’s going on in today’s housing market, reach out to me at 484-574-4088 or go to my web site, (johnherreid.com) and lets set up a time to meet, either on line or in person.