If you haven’t been in the market for a bit of time, you may have heard on the news or stories from friends about higher mortgage rates and inflated housing prices. However, if you are in the market right now you may be a little shocked about the drastic shift given that the housing market was on fire with record low interest rates and multiple offers. With this post, I hope to provide an accurate picture of what the market is looking like right now. Although these numbers may be dry, they do provide a good reference to what the market really looks like compared to one year ago. First, I would like to start with recorded sales in August, September, and October of 2023. In order, sales were 9,456, 8,023, and 7,764. For comparison, 2022’s recorded sales were 11,693, 10,172, and 8,827 which means there has been a roughly 19%, 21%, and 12% decrease in sales over the last 12 months.
There are a number of factors contributing to this decrease, one of which being the steady increase in mortgage rates. Another being the almost 9% decrease from August 2022 compared to August 2023 in active listings, lack of inventory puts buyers at a disadvantage. With short supply, demand will be driven up which will typically drive the price of said product up until volume is increased or when equilibrium is met. We experienced a 7% price increase in median sales price of August this year. Factoring that 7% increase in with the August 4.1% 12 month increase in the Consumer Price Index, it is no wonder that YTD median days on market have increased and total sales have gone down. Speculators have consistently relied on the treasury yield curve to predict economic slowdowns and recessions. Currently our yield curve is inverted which means, in a nutshell, that investors and speculators have more faith in shorter term treasury bond yields than long term, which is historically indicative of a recession. There is no one cause of the current market, but more of an amalgamation of many different economic forces and factors that have caused this slowdown.
There is some bright side to this data. Currently the CPI 12-month percentage change in all items is sitting at 3.2%. We also see that the percent change in house sales from September to October is at a 3% decrease where it fell 13% last year. Cleary that is partially due to larger market inventory, production, and an impending slow-down after the New Year; however, it is worth making note of. This is not a call to abandon all hope and jump ship! There are many options that are offered by Lenders that will help combat current mortgage rate increase and fluctuation. Now is more the time than ever to find an excellent Realtor and Lender who knows how the market works and can tailor your real estate transaction to your personal situation.
Now may be a better time for those that must change their living situation within the next year. Buyers that have sat on the sidelines, contemplating whether to enter the market or not, have lost buying power by not acting quickly due to the increase in mortgage rates. There is no guarantee that rates will be going down anytime soon, especially given uncertainty in secondary markets and inflation fluctuation, so if you’re a buyer that needs to make a move, now may be your best opportunity. Sellers will especially be able to take advantage of this market given lack of competition allowing them to command higher list prices.