Local broker Melissa Hornbeck shares her thoughts on the housing market.
Lately, the talking heads on the nightly news are waxing poetic about the nation’s teetering housing market, a market that many insist is headed for a bust. Lucky for us, Morgantown “is historically a very steady, strong market even during tumultuous times,” says Melissa Hornbeck of White Diamond Realty. We caught up with Hornbeck to take the temperature of a local real estate market that’s seen robust growth amidst very limited inventory in the past few years. Here’s what she had to say about it.
Q: Is a housing bust on the horizon?
Melissa Hornbeck: It has been my consistent narrative that we should expect a “balancing” as opposed to a “bust” of the market. That is a buzzword being tossed around, and it’s possible some markets will experience more “bust” as opposed to “balance,” but, generally speaking, what has been fueling this market surge is fundamentally different than that of the early 2000s. Morgantown is historically a very steady, strong market, even during that tumultuous time, so I am still confident the adjustment will not be cataclysmic.
Q: Inventory has been a big problem in Morgantown, with as little as a two-month supply in 2021—has that improved?
MH: As of today, there is currently three months of inventory in Monongalia County. This is—thankfully—an increase over last year, but still in the realm of being a “sellers market.” When we are closer to five months of inventory, we will be in what’s considered a “balanced” market and historically more typical for our area.
Q: Is it still a good time to sell?
MH: It’s always a good time to sell, and it’s always a good time to buy. The real estate market is a very large wheel that is ever-revolving. Sometimes it’s higher, sometimes it’s lower, but it always comes back around. A better question is, is this the right time to buy or sell for you?
Q: Can potential buyers expect to find bargains in the local market in the near future?
MH: Generally speaking, Monongalia County is not much of a bargain market. Our property values hold a premium due to several economic and geographical factors. Can they be found? Sure, that’s always true. But when it comes down to it, if you hold on to your investment for at least three to five years, chances are it will be a good investment for you.
Q: Are housing prices in the local market flattening out? What kind of percentage increase have we realized over the past year or so?
MH: Again circling back to the word “balance,” pre-pandemic, the average annual appreciation rate over the last 10 years or so was between 3.5% and 4.5%. Last year we saw a 9.2% value increase over 2020, which is hardly the norm. At the end of the first quarter of 2022, the values were 10% over the same quarter in 2021, and the second quarter was 10.6%.
That being said, volume has been decreasing a bit, so we’ll need to see what the overall picture looks like at the end of the year. There are many pieces to the puzzle of what the market is doing, and the higher the view, the more accurate it is.
Q: The Fed increased interest rates a couple of weeks ago. How long does it normally take for that kind of action to impact buyer interest/mortgage applications?
MH: I would say not to panic over the rates. The fact that they have been so ridiculously low the last several years does not mean they are now ridiculously high. It does mean they are correcting, and it’s absolutely essential that they do. The rates of the past decade, give or take, are simply not sustainable.
On a national level, we’re already seeing some impact of these changes; however real estate is a local industry. Given the severe shortage of inventory, I think it will be a while before we see a noticeable input of the general market data. There’s no doubt certain sectors of the market are being affected already, but those will be better reflected in specific price ranges as opposed to overall activity, so I would say we’ll have a more clear picture toward the end of the year.