The real estate market has always been an ever-changing entity. The past six months of 2023 have been no exception, revealing a unique and complex landscape. As I look back on this period, a few interesting data points stand out:
New listings are down by about 22%, while pending and closed sales are down roughly 26% and 25% respectively. Days on market before a sale are up 50%, indicating a slower market. Sellers are getting about 98% of their listing price, a decrease from last year’s 102%, giving room for the first substantial negotiations we’ve seen in a while.
The Current Market: More Opportunities for Buyers
The market slowdown is not uniform. Despite a 50% year-over-year decrease in showings, some market segments are still experiencing multiple offers, particularly for homes under $500,000 on the east side of town that are in good condition, priced well, and in a desirable location.
Despite the interest rate fluctuations over the past year, buyers have moved into an acceptance phase with the current mortgage rates and are willing to take the leap. This willingness has brought more buyers off the sidelines, although the arrival of the summer season has introduced a slowdown, a rare occurrence in June. With people wanting to take advantage of the warm weather after a long and grueling winter, open house and showing activities have taken a hit.
Inventory Changes: The Seller’s Dilemma
Inventory remains a crucial aspect of the real estate equation. We’re seeing about a 30% decrease compared to last year, but it’s starting to pick up. Particularly in the East Metro, where the $600,000 to $800,000 price point has seen an increase, buyers have more options. This increase in inventory allows buyers to negotiate more and even receive closing costs paid for by the seller in some transactions.
Predictions for the Future Market
The real estate industry today is more complex than ever, and professional guidance is vital. Sellers delayed listing their homes waiting for greenery to return and schools to close. This delay suggests that buyers will continue to have more options. For instance, I expect five new listings in the $600,000 to $800,000 range in Woodbury alone over the next two weeks.
The COVID market and its pricing are a thing of the past. Gone are the bidding wars and the expectation of selling for 110% of the asking price in three days. The new market’s reality can be difficult for sellers to grasp, but selling now is still a viable option with a strong millennial need for housing.
As we look ahead to the second half of this year, I predict things will slow down further, especially after October 1, unless interest rates dip into the low fives. There’s speculation about the possibility of rates coming down to the high fours in 2024 due to the election cycle. If this happens, it could reinvigorate the real estate market and potentially drive home prices up again.
Conclusion: A Time for Caution and Consideration
Given the volatile state of both the housing market and the overall economy, the buyer activity will likely continue to fluctuate. Therefore, if you’re contemplating buying or selling, now is the time to seek professional guidance to navigate these changes. Depending on your situation, I might advise you to wait and let current inventory sell off. The real estate landscape may be complex, but with the right direction, you can make the most of it.
