Across all areas of the Valley, we are seeing some pretty significant changes from this time last year. On average, the number of active listings are up 181% from last year, but the number of active listings has fallen off nearly 7% from last month. Sellers who may have waited a tad bit too long before listing their homes during the hot markets a few months ago are hitting a brick wall as many buyers are priced out of the market by increasing mortgage rates. You can see this drastic shift in the number of Pending and Under Contract listings - down 45.1% and 45.3%, respectively - over last year, and advancing the slide from just last month in October. As expected, Closed Sales are also down about 45% year-over-year.
Some may look at the Average Sales Price (currently at $272.34/sq ft), and think there is a bright spot; prices are still up about 3% from last year, after all. But keep in mind that the contracts that are closing now have been under contract for 30+ days. Buyers locked in their rate over a month ago. We will see what impact current interest rates are having on the December market when the current Pending and Under Contract listings close over the next several weeks. We suspect that we will continue to see further softening of prices, but to what extent is still undetermined.
While the lack of demand feels awkward, after so many years in a seller's market, what we are actually seeing is some return to normalcy. A market that is unbalanced between buyers and sellers cannot sustain itself forever, even if the hangover is a bit disconcerting. Homes are still selling, and there is some demand, but sellers are being forced to be more flexible with concessions than they have in the recent past.
For those who don't have to sell, many are simply exiting the market and holding on to their homes for a bit longer. With nearly 7% fewer listings than a month ago, we expect December to further weaken. A softer December isn't uncommon, except for the last couple of years - many buyers and sellers historically take a break during the holiday months. However, according to the experts at Cromford Reports, "we anticipate one of the quietest Decembers on record with few contracts signings, few closings and few new sellers placing their homes on the market."
The big question is about the coming Spring market, which officially kicks off after New Year's. Interest rates seem to have stabilized, for now, and have even come down a bit. If this trend continues, we may see demand pick back up. But if the rates increase again after the first of the year, then buyers will likely stay on the sidelines.
Find out what's happening in Real Estate in your area! Click each area below to view the snapshots.
We are here to help! If you want to find out how much your home is worth in this strong market, email me at [email protected]. We would be happy to help you determine if the time is right for you to sell your home or buy a new home.
#Data courtesy of Cromford Reports and ARMLS.