MARKET UPDATE

“In Moscow and Latah County there is still pent-up demand in the residential sector because of the following factors:

1. People still want to move here and live here but they don’t have either as much liquidity, meaning they are not able to as easily sell the home where they are presently living.
2. Rental properties are still in high demand because of record enrollment at UI and our local workforce is growing. That is tempered by the fact that we have not been able to build rental housing as fast as it is needed.
3. People looking to buy and people looking to sell don’t want to trade their low fixed-rate mortgage with a higher rate. That means less sellers locally who are willing to sell and less buyers willing to buy.

30-year fixed interest rates were creeping up all fall and in December 2023 they kissed 8% for a brief moment. Between that and winter on the Palouse, the market activity has significantly decreased when compared to what it has been in years past. Today, however, interest rates are hovering in the mid to high 6% arena and by paying one point a buyer can buy down that rate to right around 6%.

Rate predictions are showing that over 2024 we might see rates for a 30-year fixed loan go down to 6% or perhaps even a little lower. I know a lot of people are waiting for the day when rates go back down to 3 or 4%, but those days are a long way away and likely in the rearview mirror for years to come. I suspect people are going to have to get used to the new normal of higher rates, which should thaw the market a bit whenever that realization hits home. People looking to wait it out will likely get tired of waiting.

I believe that this spring will be off to a strong start but perhaps not as “crazy” as years past. This will mean sellers might get multiple offers in the spring but perhaps not with high escalations as we’ve seen in the past. Also, softened prices over the winter will help buyers get a bit more value than last fall.”

Sean Wilson
01/31/2024