Dramatic Market Shift
We have been sounding the alarm bells for months that the market was shifting – even if no one was feeling the impact. In the last few weeks, the numbers are confirming a dramatic shift. Here are the facts – rather than clickbait headlines.
The alarming news
Overall the supply of active properties is up 40% from this time last year. More shockingly, the supply of MLS properties for sale is up 45% in 6 Weeks. Pretty dramatic, right? The Cromford Report shares these numbers: “Inventory listed between $400K-$500K is up 35% in just 3 weeks. Counts in all segments between $500K-$1M are up 99% in 6 weeks and the count from $1M-$1.5M is up 54%, also within 6 weeks.” If you are a seller or would-be seller, this is important information confirming a radical shift is under way. Jumping numbers of available properties are not good news for sellers. But please, read on.
What is happening?
Not surprisingly, the rising prices along with the rising interest rates are doing what they are supposed to – dampen demand. Interest rates rise quickly and lower slowly. Thereby affordability is taking a big hit that is not going away soon. For those shocked by interest rates in the 5% range (having become acclimated to rates in the 3% range) we gently remind you that historically rates have averaged in the 8% range. But back to supply, it is not that a flood of listings are coming to market but rather less are going under contract. That is what dampened demand looks like – less things selling. When less things sell, supply builds.
What this means and why not to panic
Not all price points are experiencing rising inventory in our market. The properties below 400K are still scarce and in high demand. Additionally, the overall number of available properties remains ridiculously low. The Cromford Report confirms: “As of this report, the supply count is 7,157, still 72% below normal for this time of year but rising quickly”. We repeat, 72% below normal.
What does this all mean? If you are a buyer shopping in the 500K+ market – you will have more choices and less competition. If you are a seller, your prices are not dropping and you still have below normal competition. The Cromford Report summarizes:
“The market is in the early stage of shifting out of an insane seller market and into a mere frenzy seller market. Before we know it, it could be a regular old hot seller market where properties still appreciate but take multiple weeks to sell…While the market is still strongly in favor of sellers, it is changing rapidly. For those sellers waiting to sell close to the peak of price, this may be the time to list. Prices are still projected to continue rising, but at a slower pace over the next few months.”
We hope this helps put in to perspective the shift. Caution is advisable, fear is not. If you have questions about buying or selling in today’s market, contact us. Market knowledge is our business.
Russell & Wendy Shaw
(Mostly Wendy)