With many buyers sidelined as home prices skyrocketed out of their reach during the first half of 2022,
the buying frenzy appears to have ended. Two major factors driving increased home values were
historically low mortgage interest rates and a tight Ocala, FL listing inventory. Other statistics impacting
the Ocala housing market are a decreased median home price, as compared to last year, and fewer
multiple offer situations as new homes come on the market. While many key indicators of demand are
changing as we head into fall, experts still report a healthy atmosphere. While not signaling a balanced
market, signs do point to a housing bubble that hopefully will not burst. Let’s take a look at some of the
trends in more detail.
Ocala Mortgages are More Expensive
To combat inflation, the Fed committed to increasing interest rates from mid-2021 through at least the
end of 2022. By doing so, mortgage rates also increased making monthly payments more expensive for
home buyers. This trend has slowed purchase activity and decreased demand leading to higher levels of
inventory.
Increased Inventory
Almost 100 more homes were listed this July than there were last July. One way to judge the supply of
homes on the Ocala market is Months Supply of Inventory (MSI). As of this July, it will take a month
longer to deplete the current inventory of listings than it did last July. MSI shows a combination of both
increased listing activity and decreased purchases. Plainly, more homes were listed in July 2022 with
fewer sold than the market saw in July 2021.
This makes sense given rising interest rates impacting borrowers’ ability to take out mortgages. Statistics
show there were 10% more listings in July of 2022 than there were in July of 2021 but demand for them
has lessened. Sellers are forced to do something they have not had to do in a long time – reduce their
sale prices.
Home Prices Cool Off
While summer trend lines have shown a slow decline in Ocala’s median home price, experts are taking it
as a healthy sign for the market as a whole. With a run-up in home values unlike anything we’ve seen
before, 2021 was considered a buying frenzy. But was it sustainable for the Ocala market over the long
term? Experts believe a cooling-off period is necessary after bidding wars drove buyers to purchase
sight-unseen, waive inspections, and make offers higher than asking. Buyers that were driven out of the
market in late 20211 and early 2022 may now find renewed motivation to reenter negotiations now.
Buyers Feel Less Pressure
Ocala homes are staying on the market longer in July 2022 than they did in July 2021. Last year homes
were listed for eight days on average but are now being seen for eleven. Both numbers are still
historically low but signal less pressure for buyers wishing to take more time in their home searches.
Median home values still remain strong as we head into fall with nearly 25% appreciation in July. Experts
expect modest appreciation through the end of 2022, again signaling a healthy normalization for the
Ocala housing market.
Whats to Come in 2022?
With the Fed committed to raising floor interest rates, mortgages will continue to increase. Some
potential buyers are expected to react negatively to these changes but will eventually respond positively
to increased inventory and reduced negotiating pressure.
