Is 2022 Turning into a Buyer’s Market for Luxury Real Estate?
Anyone watching the financial news these days has seen some daunting headlines, but what does it all mean for potential homebuyers? A look at the latest market data provides insight into emerging real estate trends and reveals why luxury homes in North Central West Virginia remain a blue-chip investment. Of course, this article is not intended as financial advice, but White Diamond Realtors believes that anyone considering a real estate purchase could benefit from being informed.
The inventory of available homes — and prices — are both trending toward a buyer’s market
According to Ramsey Solutions, home prices across America are up, but they are no longer rising as rapidly as they did during the previous two years. The numbers also prove that location still drives the market, as prices in growing cities continue to increase, but prices in cities that are losing population, are dropping. Nationally, the total housing inventory was down in March 2022 compared to 2021, but by the end of April, it was only down 3% over the previous year. Could a trend be emerging?
Although homes are still selling faster than they did two years ago, the numbers do reveal a slight slowdown. According to the National Association of REALTORS® (NAR), existing home sales fell for the third straight month in April. In fact, pending home sales just hit their lowest level since 2020. Meanwhile, online searches for real estate, mortgage applications, and home tours are all down compared to 2021. As a result, 40 of the 50 largest U.S. housing markets saw more homeowners reduce their asking prices in spring 2022, compared to the previous spring. If these trends continue, they could be leading indicators that a buyer’s market is emerging.
This is great news for home shoppers, but it isn’t the whole story. Although mortgage rates rose in the first half of 2022, they just decreased for the second week in a row in May 2022. Since this decline will not necessarily continue, for buyers looking to finance their purchase with a loan, this could mean that the time to purchase a new home is now.
What does this mean for Morgantown?
Anyone watching the luxury home market in North Central West Virginia knows that the number of homes for sale has been limited in recent years. Homes in a desirable location with a great design sell fast and buyers must act quickly — or be left out in the cold. Furthermore, the area’s population has continued to slowly increase, bucking trends across the rest of West Virginia, and ensuring continued demand for housing.
However, recent trends suggest a buying opportunity. According to Rocket Mortgage, for example, the number of Morgantown area homes on the market increased by 49% from March 2022 to April 2022. During this same period, the median list price was down over 9%.
Anyone watching the local listings knows that this is a shift that may not last long. North Central West Virginia remains a strong market and most prognosticators believe this slowdown in sales is temporary, especially for luxury homes. For example, Sotheby’s International Realty released their 2022 outlook recently. While recognizing that homes are spending more time on the market than they did in 2021, they expect the number of prospective buyers to grow even more in the coming year, concluding that “real estate is considered a hotter investment than ever.”
Homes remain the primary store of wealth for most families and, according to the NAR, home prices have risen at an annual pace of 8.8% during the past ten years, making home ownership one of the soundest strategies for building personal wealth. This is especially true for premier properties, where the increase of value has been even more pronounced. As Sotheby’s put it, luxury real estate holds its value through economic ups and downs, and “Amid inflation and relatively low interest rates, luxury real estate remains a trusted investment.”
The market for luxury homes in North Central West Virginia is expected to remain highly competitive for years to come. However, there could be an opportunity for savvy buyers to take advantage of emerging market trends now, before a full economic recovery is underway. In a tight market like the greater Morgantown area, such opportunities are rare, indeed.