Most, if not all, housing markets across the nation are experiencing a market shift due to rising interest rates – Cobb County being one of them. Feds are incrementing the fed funds rate in a step by step manner so as not to overwhelm communities and businesses that are still recovering from the financial void left behind by the pandemic. How does that impact the housing market? I can tell there is a gradual but considerable change already underway in Cobb County’s housing market but to understand it in detail we have to take a look at multiple variables.
But in short, despite the change in demand and home prices (that we will soon discuss), the state of the housing market in Cobb County is looking strong and expected to undergo more changes in Q3.
Growing Stronger In 2022
There is growing speculation that the Fed Funds rate will increase by 75 basis points following their July 27 announcement. This will inevitably streamline the demand further as buyers who were relying on low interest rates will start backing out. Markets and investors across the nation are closely watching for any surprises and trying to figure out if the Fed will succeed in getting ahead of the inflation rate.
Rising mortgage costs are gradually tilting most housing markets nationwide towards a stable point – which saw significant activity in the last couple of years due to economic relaxations by the Fed. Until Q1 of 2022, low interest rates had kept many buyers interested despite low housing inventory but as home prices rose, that demand has shrunk considerably. While some factors are indicating a housing shortage and higher prices in the coming months, it’s still a good time for buyers to make their move. To prove it, let’s take a deeper look at the second quarter numbers for Cobb County.
The Median Sold Price
As mentioned before, the numbers for Cobb County in the second quarter of 2022 remain encouraging regardless of the shift in market trends. In comparison to the same time last year and Q1 of 2022, Cobb County’s market saw an increase in house prices by a significant margin. The median sold price for Q1 of this year was $405,100, which grew to $450,000 by the second quarter. When compared to the same time last year, we saw a 15.4 percent increase in the median sold price.
While this may sound like good news to some sellers, they also have to be mindful of the declining demand. Many sellers reported receiving fewer offers compared to last quarter forcing them to re-strategize their approach so their offers can align with the changing demand. Many experts are predicting that sellers will see higher days on market going through Q3. This change is expected to be brought on by the interest rate hike as the federal reserve tries to recuperate from the economic turmoil caused by the pandemic.
The Number of Homes Sold
The number of homes sold in Cobb County in the second quarter of 2022 was 2,587. Although this was 23.4 percent more than the number of homes sold in Q1, when compared to the same time last year, we are looking at a 18.7 percent drop. Low inventory and rising home prices drove many buyers out of the market in Q2 and the demand is expected to thin out even further if interest rates rise any more.
Some sellers are reducing their asking price to adjust to the new demand so it’s safe to say that Cobb County is gradually moving out of a seller’s market. However, there are still many opportunities for developers to capitalize on existing housing stock shortages as the market is coming down hard on people who are looking to build new homes. But until new construction catches up with demand, sellers will continue to enjoy some cushion due to lacking inventory.
The Median Days on the Market
Next, let’s take a look at the median for days on market for the second quarter which is down by just one day compared to last quarter. In layperson’s terms, median days on the market determines the number of days a home is on the market from listing to the closing.
Median days on market for Cobb County was five days in Q2, which is a day less than the previous quarter but the same as Q2 of last year. This implies that despite rising home prices and low inventory in Cobb County, buyers are eager to take homes off the market rather quickly.
The Current Mortgage Rates
The interest on mortgage rates went up steadily in Q2 of 2022 and more changes are expected to arrive in the coming months. This means that both sellers and buyers are positioning themselves to take advantage of the low interest rates before they start rising again. At the time of the writing, the average mortgage rate for a 30-year fixed-rate mortgage is 5.6 percent.
Compared to the numbers from last year when we saw interest rates hit a record low, the rise in mortgage rates can lead to stiffer competition in the future. Even though the days on market for Q2 saw a decline, sellers can expect their homes to stay on the market longer as demand will start to go down in Q3. Some sellers may have to go with a lower asking price to adjust to the incoming changes in the housing market. While these numbers are always subjected to rise and fall, there are signs of a returning stability to the housing market in Cobb County.
The Overall Future of the Market
The third quarter is likely to pick up steam as both buyers and sellers rush to find good offers before the next quarterly interest rate hike is passed by the Federal Reserve. Fewer homes on the market means a stiffer competition but higher interest rates is sure to drive away a certain demographic of buyers who were extensively leaning on loans.
The second quarter saw an increase in the number of houses sold in Cobb County, indicating that buyers are still driven to invest so if you are looking to sell your home, there is no time like the present. If mortgage rates go up in the coming months, it might ward off potential buyers so it’d be wise to capitalize on the opportunity while the market is still somewhat favoring sellers.
Both buyers and sellers must learn from their agents about what their best options are. First-time home buyers may feel the pressure from the housing crunch but if they continue to be patient, they can lean on their savings to close a good deal. That said, I highly recommend these clients get in on the action as soon as possible.