As we he,d into fall here’s what you need to know from someone on front lines.. Lets look at the stats below, break them down, and come to an honest conclusion.
DAYS ON MARKET RISES UP 28% Since JUNE but about the same as this time last year)
Days on market rose sharply since June 2018 (22 days) up to 28 days for Sept 2018. BUT….this is not the indicator to panic about because this is the typical seasonal shift we see each year as we move into fall. Basically staying status quo. If past history is a guarantee of future performance, we can expect days on market to continue to rise through the Holidays. What will be very telling is if next spring 2019 we see it go back down or not….
# Homes For Sale UP 20% From Last Year But The Same Since Last Month (12,009 Active Listings)
In January 2018 we started with about the same # of homes for sale as we did at the same time in Jan 2017. BUT…more homes came on the market this year than last, and now we have 20% more listings for sale than exactly one year ago. Wowza! Fewer homes for sale is what started boosting price gains, as demand far exceeded supply. This data shows the market is shifting. Lets keep going below before we decide what this means overall.
# Sold Homes (5,230) is DOWN 23% From Last Month & Down 12% From Last Year
Ok, stay with me here. So the seasonal drop off in homes sold between August and September is normal. You can see there was a substantial drop off last year at this time too. BUT…if we compare year over year, this is startling. We have MORE homes for sale (23% more in fact as we saw above) and we have LESS homes sold than last year. So this is more than a seasonal shift.
The market is gaining supply (homes for sale) faster than they are being sold.
Substantially more. What will be telling is in March when we typically see a spring rush. Will be see even more homes for sale AND if the market is already not absorbing the surplus, we could see inventory rise sharply in the spring 2019. What this means to follow below. However, we were seeing buyers showing signs of fatigue competing against multiple offers and sellers hesitant to list because they don’t know where they will go. As the market started shifting I believe more sellers are hoping to sell at the “top” of the market so they are putting more homes on the market, and faster than they can be sold.
Median Sales Price of Single Family Homes ($390,000) is DOWN 5% Since 6/18 But UP 6% From 1 Year Ago
Oh boy. Here we see sales prices dropping from what appears to be a “peak” in June 2018. But this is not a reason to panic. We can see home prices often peak in June and drop the latter half of the year. This is cyclical and normal (See how it dropped the same last year in graph below).
BUT….a year over year comparison is important to get some perspective as to where we are trending. A year ago homes were selling about 6% less than they are now. What we need to keep an eye on is if home prices increase the latter part of this year. Last year home prices actually rose between 9/17 and 12/17 by 2.5%. With inventory rising so sharply the past few months, I doubt this will happen again. So…I expect prices to NOT increase and instead have further downward pressure due to increase supply and lower demand.
This market adjustment is in line with predictions that prices would normalize as supply gained. However, what is bizarre is that demand has dropped quickly. Many expected supply to increase and hence this would put downward pressure on prices. BUT most thought demand would remain a constant. These numbers show demand is not remaining constant despite strong economic indicators (employment, retail, growth, etc) and more sellers are wanting to sell at the same time fewer buyers want to buy.
more sellers are wanting to sell at the same time as fewer buyers want to buy.
If this continues, perhaps prices will adjust downward which may actually increase demand again. Many believe (an I tend to agree) that affordability is what is lessening demand. I believe the same amount of buyers WANT to buy, but fewer can simply because of affordability. Sellers waiting to sell may be wise to list sooner than later to maximize the sales price. Those waiting to buy may be in for a treat in the spring is this continues…and prices could quite possibly continue slightly downward. Only time will tell…and if we really had a crystal ball we would win the lottery 😉
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