Happy New Year Everyone!
I hope your 2022 ended well and you are already off to a great start for 2023. We are going to spend a few minutes recapping 2022 in real estate and some current numbers. I’ll finish this email with a recommendation for proceeding this year if it is in your cards.
Days on Market:
The number of days before a contract dropped to zero for a little while. It is now steadily rising. Understand it is an average. We still have houses that sell in a day or two. But now we have homes selling in 30 days and some even longer than 100 days. This number will continue to rise for a while. I’m honestly surprised to see it this low. I know that some of this is affected by when new construction homes are added to the MLS as well. Sometimes they are put in right before closing even though the buyer has been under contract for quite some time. I’d say this is a small but significant number.
The days on market numbers fit the next charts. The number of houses entering the market for sale has dropped substantially. Houses are staying on longer and the number of closings has fallen off a cliff. We actually have an almost even market when you look at months supply of inventory. This chart plots out annual numbers. Understand that comparing the month of November in 2022 to November in 2021, the quantity of closings is almost half of the year before.
So what does all this mean? If you are talking about value, it doesn’t mean a lot-yet. You are not losing value in your house right now. If you are thinking about selling or buying, it means our strategy and expectations are completely different from last year. Last year was a complete domination by sellers. This year there is negotiation and, in some cases, the buyer has the upper hand. Prices are not dropping much (specific to areas and price points). Almost all price drops are the result of overspeculating growth in price (like we did last year). But buyers are able to get some closing costs, sellers are making repairs, appraisals matter again, home sale contingencies are back. It is more normal than its been in a long time.
If you are thinking about buying now is a great time. For all the reasons in the paragraph above. You actually have a chance to make a good deal. Yes, rates are high but there are opportunities there too. There is talk of rates dropping this year. If they drop a lot, buyers will likely flood the market and make it harder again. My friends at Primis have a solution to make that decision easier. See the embedded flyer. Basically, they will lower their fees on a refi after 6 months of the current rate. This means that when rates drop (likely 3rd quarter), you can refinance at a lower rate for a huge discount in the cost of the refi. You end up with a win on the negotiations now and a win at the end of the year with a lower rate. If they don’t drop, you wait until they do. Call my friend Bryan Nale for more info on this.