The Tri-Cities real estate market is at a crossroads. As interest rates rise to 6% or higher, buying power has decreased significantly in the past few months. For every 1% increase in interest rates, buying power decreases by around 10%. This means that a potential buyer that was looking at $250,000 homes at the beginning of the year, would now only be able to afford a $175,000 home. Not only is this going to have a drastic effect on overall cost of living, but the velocity at which homes have been selling is going to decrease. This, in turn, will lead to fewer homes being sold, and prices to decrease to pre-pandemic levels. However, this is not going to happen overnight. Expect these changes to happen over the next 6-12 months.
The market has already seen the availability of homes increase in just the past few months. At the end of May, the region had 1.05 months of inventory – up from 0.9 in March. Prices don’t appear to have been affected yet, but expect the median sales price to start to taper off within the next month or two. The average sales price in the Tri-Cities last month was $303,622, up 30.9% from last year.
Curious about how the current real estate market could impact your ability to buy or sell? Contact us today for a free, no-hassle consultation.