Market Summary for the Beginning of July

Here are the basics – the ARMLS numbers for July 1, 2023 compared with July 1, 2022 for all areas & types:

Active Listings: 11,545 versus 14,406 last year – down 20% – and down 1.6% from 11,730 last month
Pending Listings: 4,997 versus 5,766 last year – down 13% – and down 12% from 5,696 last month
Under Contract Listings (including Pending): 7,858 versus 8,621 last year – down 8.9% – and down 13% from 9,028 last month
Monthly Sales: 7,377 versus 8,113 last year – down 9.1% – and down 9.0% from 8,110 last month
Monthly Average Sales Price per Sq. Ft.: $287.76 versus $300.43 last year – down 4.2% – but up 1.5% from $283.71 last month
Monthly Median Sales Price: $443,000 versus $474,374 last year – down 6.6% – but up 2.1% from $434,000 last month

Comparisons with this time last year are getting easier, as a year ago the market was deteriorating as demand from institutional investors and iBuyers collapsed. A steep rise in interest rates had spooked the market and ordinary buyers were holding their breath too.

A year later we have a market which is seeing very low demand and even lower supply. With the 30 year fixed interest rate stuck around 7%, most homeowners do not want to sell and buyers are struggling to qualify and afford a home. Buyers are unimpressed with the low inventory of re-sale homes and are increasingly turning to new built homes. Developers are enjoying strong orders, firmer prices and healthy margins, but have relatively low inventory of homes for sale and a weak pipeline of new permits to build. The strongest sector in the housing market is single-family new construction.

Some people drastically overstate the importance of interest rates in determining home prices. Interest rates are important but when they move higher they lower supply as well as demand. It is the balance between supply and demand that determines how prices move. At the moment supply is much weaker than demand so prices are increasing, as they have since January.

For homeowners, rising prices are reassuring. There are remarkably few new listings and closings are declining as we enter the summer doldrums. Title companies, lenders, warranty providers, inspectors and appraisers are all suffering from a prolonged weakness in transaction volume. While interest rates remain at 6.75% or higher, we appear unlikely to see much improvement. In fact rising prices will make it even harder for buyers to close on a home. However if interest rates were to fall to 6% or below, we could see a sharp increase in demand and an improvement in supply too.

We will shortly see the average $/SF for closings overtake the figure from a year ago. At the moment the gap is 4.2%, but last year’s prices were falling fast and this year we are seeing a rise of almost 3% in just 2 months. The third quarter is notorious for weakness in average pricing, but even if closed prices stay flat for the next 3 months, annual appreciation will have turned positive by the end of the quarter.

If you’re considering selling or buying give me a call to discuss your situation and current market conditions.

I love referrals! Please remember me! Thank you, Shawn, your Realtor.