News has spread about the shifting market – largely driven by spiraling interest rates suppressing demand. That was a wakeup call to sellers who began rushing to place homes on the market. While the shift in the market was not unexpected, the velocity of the change was. We have seen a 220% increase in supply over the past 15 weeks. Gulp. It’s been so long since we’ve been in a balanced market- do you even remember what a balanced market is? It is when the amount of supply is balanced in relation to the demand (4-6 months of supply).
But not all areas and price points are behaving the same. The below $400,000 is holding up, as is the 3 million+ price range. The mid-range is where the supply is arriving at a rapid rate. In particular, the most vulnerable range is the $500,000-600,000 – where supply has grown most rapidly. Why is supply building so quickly in the mid-range? Largely, builders. Tina Tamboer of the Cromford Report explains: “Supply across all price points is up, with 53% of active listings added by new home developers and investors. Builders especially are dropping prices and offering unique buyer incentives to compete.”
As in new homes, the resale home seller is feeling the impact. Offers trickle in rather than flood in. As Tina further explains: “… contract activity has dropped 28% in the last 6 weeks. The number of listings under contract at this time of year should be around 10,000, putting today’s count of 8,680 well below normal.”
To summarize, Buyers now have choices and a bit of time to choose. Sellers are back to needing show-ready homes and realistic pricing. What will this market look like by end of year? No one can say with certainty. In the short term it seems likely the shift will continue. We could see prices regress a bit from their peak. Whatever the future holds, we will continue to track the trends and report it here. As always, contact us to address your particular circumstances and concerns. After 44 years, we can help no matter the market.
Russell & Wendy