Local real estate market cools off

Jun. 28—Owensboro's real estate market has been white-hot for months with people bidding home prices up above the asking price.

But rising interest rates have cooled the market somewhat in recent weeks.

Fortune magazine wrote last week that "the average 30-year fixed mortgage rate has jumped to 6.28% — up from 5.3% just a month ago. That marks the highest mortgage rate since 2008. The 3.2 percentage point jump in mortgage rates over the past year also marks the biggest upward swing since 1981."

And in May, the Greater Owensboro Realtor Association reported the sale of 160 homes.

That was down from 182 a year ago, but well above the 107 sold in May 2020, when COVID was beginning to ramp up, creating a lot of uncertainty.

But the median price was still rising in May — to $194,500.

A year earlier, it was $190,000.

And in May 2020, it was $155,000.

Total sales reached $35.8 million in May.

That was down from $38.1 million a year earlier, but double the $17.9 million two years ago.

The average home was on the market for just 62 days in May.

That's up from 55 days a year ago, but down from 99 two years earlier.

The shortage of houses on the market seems to be easing though.

There were 178 available last month.

That's up from 129 a year ago, but down slightly from 197 in May 2020.

Michelle Wiesman, association president, said, "Maybe it's the slight increase of interest rates or the market slowdown we've seen in other places has finally gotten here, but May showed a cooled-off market for our service area."

She said, "Although home value is holding steady, 22 less homes were sold last month than the previous May. Total sales volume also decreased 6% from what we saw this time last year. Even with this slight slowdown, the market here remains strong."

Devin Taylor, the association's president-elect, said while sales have slowed in May and are trending slower in June, the value of homes "is holding steady."

He said, "The days on the market may go up a little."

But Taylor said that once people get adjusted to the new interest rates, which he said ranged from around 5.8% to 6.1% on a 30-year mortgage, sales will begin to climb again.

The market is nothing like it was in 2008, when the value of homes collapsed, Taylor said.

"This is a more typical market," he said. "I don't think values will stay flat."

Some houses may still sell for more than the asking price, Taylor said.

But the bidding wars are apparently over for the time being anyway, he said.

"Things have just slowed down," Taylor said. "That was a big increase in rates in a very short time. But home prices in Owensboro are lower than they are in many parts of the country."

Nationally, Lawrence Yun, the National Association of Realtors' chief economist, says, "The housing market is clearly undergoing a transition. Contract signings are down sizably from a year ago because of much higher mortgage rates."

The NAR says that "at the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by about $800 since the beginning of the year as mortgage rates have climbed by 2.5 percentage points since January."

Keith Lawrence, 270-691-7301 klawrence@messenger-inquirer.com