June’s market data confirms what we’ve known for a couple of months. The hot sellers’ market is cooling down. The latest statistics shows inventory of single family homes was at its highest month-end level in 20 months. Despite higher inventory, unit sales were down 7.7% from last month and 15.4% down from the same month a year ago. Sale price to list ratio also declined 2.6% while days on the market increased byalmost 20%. The average price rose slightly (0.4%), but it’s still almost 2% below thepeak set in March.
Cooler, But Still Hot
I see this market similar to how I see boiling water after the burner has been turnedoff. The water is not as hot as it was, but it’s still plenty hot. The average price is still 19% more than a year ago, sales prices are still almost 8% above list prices, homes are still getting multiple offers and they’re selling within 20 days. These numbers still blow away those of the last 5 years, all of which were widely considered “hot” markets.
What I’m Watching
The recent trend in average price and unit sales relative to inventory has caught my eye. The average price typically goes up from March to June, but this year it went down. Additionally, higher inventory is not yielding more sales. That means supply is higher than demand. Could that be the result of rising interest rates? Can buyer fatigue be settling in? These are areas definitely worth tracking in the coming months.
Sellers: Time To Readjust
The most relevant adjustments sellers need to make in this market is in setting the right price and having realistic expectations. When pricing a home, current market conditions play a more important role than just recent sales. Once on the market, offers are expected to come within a tighter range of asking price. The days of frenetic bidding seem to be over and sellers are advised to adjust expectations accordingly.
Buyers: Stay Active And Realistic
Higher inventory levels have not only given buyers more choices, but it also has given them a little more leverage on price and terms. Whenever sellers face competition, they are more prone to be flexible. However, buyers are advised to stay realistic. The market still favors sellers. Prices are still stable and multiple offers are still being generated. It’s hard to gauge the direction of the market, so take advantage of it now. Consider looking at homes that have been sitting for a while, you might be able to get asking or below asking with favorable terms...