The hot housing market is likely to cool down with rising mortgage rates, but for now it remains fairly steady, according to real estate agents, brokers and associations across Mississippi.
Inventory remains low in virtually every market. That means bidding wars often erupt for much sought-after homes. But the real estate executives do see an eventual slowdown in sales accompanied with a price drop.
It’s just a matter of when that happens.
On the Gulf Coast, Bay St. Louis and Ocean Springs are popular with tourists, and the cities have seen large increases in sales and home prices, according to Gulf Coast Association of Realtors Danny Lee.
“The housing market along the coast has been booming over the last several years. We’ve seen a huge increase in both primary home purchases, as well as second-home purchases,” he said. “The coast is fast becoming a popular tourist destination and has been receiving a lot of national attention for its affordability compared to other beach communities.”
The average sales price s $268,000, and homes are on the market for an average of 26 days.
“We have seen a slight stabilization of the market with rising interest rates, but the market seems to be holding strong,” Lee said. “We anticipate these trends will continue for the near future.”
In the Greater Golden Triangle area — which includes Choctaw, Clay, Lowndes, Noxubee, Oktibbeha, Webster and Winston counties — association board president Rick McGill said, “We are blessed in our area to have one of the country’s fastest growing industry areas. Being a right to work state and us here in the Golden Triangle area having these Megasite work development plots, we have doubled our industry in just a few years. Couple that with the Columbus Air Force Base and Mississippi State University, things are good.”
The average selling price in the area is $212,647, but the best-selling homes in recent years has ranged from $250,000-$350,000.
“Of course the Feds raising rates are beginning to affect sales. The higher the rates, the lower the average price is going to become,” McGill said.”I still think prices and inventory are going to remain close to where we are now. The cost of building is still so high.”
With the Federal Reserve raising short-term rates to fight inflation, borrowing costs will increase. The record-low interest rates enjoyed for the past several years is history and unlikely to return anytime soon as the Fed struggles to deal with the highest inflation in 40 years.
Rates on home loans have soared in the past few months, mostly in anticipation of the Fed’s moves, and will probably keep rising.
The national average for a 30-year fixed mortgage has jumped from 3% at the start of the year to well above 5%.
The higher mortgage rates will likely dampen home buyers and home prices could rise at slower pace. There is evidence of that happening, as sales of existing homes have fallen for six straight months. Also, new home sales have falle. These two factors combined have modestly boosted the supply of available properties.
Still, in hot markets like Oxford, multiple offers on homes is not uncommon.
Linda Allgood, associate executive of the North Central Mississippi Realtors, said “Any new subdivisions in Lafayette County and especially developments inside the Oxford city limits are the fastest growing. However, we have such a condo/townhouse market that those developments are always in high demand.”
Last year the median price was $278,000 for single family homes and $225,000 for a townhouse/condo. Those prices are just for Lafayette County for the townhouse/condo since it is the only area in the market with a demand for those types of properties due to the student population and second home market, Allgood said.
The association includes Lafayette, Yalobusha, Panola and parts of Calhoun, Pontotoc, Union and Marshall counties.
Like her colleagues across the industry in the state, she expects the interest rates to have an effect on sales.
“In the last few weeks with interest rates rising, we have started to see a slight slowdown with days on market and properties going under contract. We expect that to continue in the months ahead,” she said.
Another booming market is DeSoto County. Amy Patterson is president of the Northwest Mississippi Association of Realtors, which encompasses DeSoto, Panola, Tate and Tunica counties.
There, Olive Branch and Southaven are the fastest-growing communities. Hernando also is picking up momentum. The average selling price in the area is nearly $324,000, and the average days on market is a mere 13 days.
“Northwest Mississippi is definitely booming,” Patterson said. “We have seen record sales in real estate in the past few years. In May 2019 average sales price was $218,723 with an average days on market of 44 days.”
She added, “Cash is king in this market. Many sellers want a quick sale with no requests for repairs and that generally ends up being investors. We are also seeing sellers decide not to accept offers from investors because they aren’t wanting more rentals in the neighborhood they’ve lived in for so many years, along with subdivisions adopting new standards and not allowing rentals.”
In East Mississippi, which includes Lauderdale, Clark, Kemper, Neshoba and Newton counties, it remains a seller’s market for now.
“It’s not unusual to have multiple offers and be under contract within 24 hours,” said East Mississippi Realtors association executive Betty Oltremari. “Values have increased, I would say proximately 20% last 2-3 years.”
As for the rising interest rates, they haven’t slowed the market just yet.
“I anticipate that it will if interest rates continue to rise, then we will transition back to a more stable market,” Oltremari said.
Shawn Lowery, association executive for the Southwest Mississippi Board of Realtors which is comprised of Lincoln, Pike, Walthall, Lawrence and Amite counties, said the area is in the very beginning of a slow down.
“I anticipate the rates to further slow sales and for inventory to increase,” she said, adding, “I see the interest rates affecting the amount buyers can qualify for. That will put downward pressure on pricing and may even make the lesser expensive homes in higher demand for a while.”
And in Picayune, MLS president Bruce Kammer said,”We have had a very strong market which is starting to show signs of slowing. With the lack of inventory, coupled with interest rates rising homes will be longer on the market … Sellers are still looking at ‘boom’ prices, but as days on market get longer, those prices will come down.”
