Fischer: Chill out and enjoy the thawing housing market
Consider the ice cube: stable in a consistent temperature and immobile on its own without a change in temperature. Personally, I prefer the ice cube in less of a solid and more of a liquid. In other words, I don’t like ice. It is cold, hard on my teeth and makes it difficult to take a sip of anything without spillage. Granted, that is likely due to operator error. Either way, I’m not a fan. I am also not a fan of a frigid real estate market. Fortunately, this market is not immobile, like an ice cube. Although it is a nip of frost on the ground, there is a zero percent change of an impending iceberg. Grab some gloves, button up and let’s look at the facts.
According to our economic real estate guru Lawrence Yun — i.e., the National Association of Realtors’ chief economist — although both buyers and sellers were chilling in the month of November 2022, literally, housing prices are remaining resilient. The number of sales for existing homes, including single-family, condos and townhouses, did drop from the previous month by a full 7%. As interest rates increased and the market naturally slowed down from the unnatural high of the pandemic, the prices remained stable. This is most likely due to the continued lack of inventory despite buyers holding back.
Interest rates more than doubled compared to this time last year, with the peak reaching around 7.08% for a fixed 30-year mortgage, depending on credit score, down payment, loan amount and other variables. However, someone has finally turned up the temperature of the freezer and the ice cube is beginning to thaw. We are starting to see small shifts in the interest rate, which will propel market activity in the next several weeks ahead.
Yun has generously provided us with some key indicators from the November sales data. The first of which would be a statistical analysis of home prices. The median existing-home sales price has increased 3.5% from one year ago. This is due to limited inventory nationwide. Although there seems to be more homes on the market right now, it is simply because the buyers are delaying purchases, not because of a lack of need.
The number of days on the market would be another indicator. In November, 61% of homes were on the market for less than a month. This is up from 18 days last year but still below the overall average.
At the risk of beating a dead horse, which sounds immensely cruel, housing inventory is still down. In fact, at the end of November, total housing inventory registered 1.14 million units, which is down 6.6% from October. Although it is up 2.7% from a year ago, we are still at historic lows.
Predictably, all cash sales are up. In fact, 26% of sales in November were cash. Investors and second home buyers made up a little more than half of these buyers. However, even first-time home buyers were also up from a year earlier, when they were priced out of the market due to multiple-offer competition and an increased number of buyers coming in with cash over appraised amounts to closings, making the market more difficult for buyers without extra cash. In addition, foreclosures and short sales are only accounting for 2% of sales nationwide, consistent with one year ago at this time.
All of these factors indicate a thaw. Thank the heavens above. No ice for me, thank you.
Jen Fischer is an associate broker and Realtor. she can be reached at 801-645-2134 or firstname.lastname@example.org.