Merry Christmas and Happy Holidays, Clients and Friends!
To those of you with whom we have not engaged with over the past year, we genuinely hope 2023 was a wonderful year for you and your loved ones.
To those of you with whom we did get to interact with this past year, thank you once again for entrusting us with your business in 2023.
This past year was certainly fraught with change in our industry, but we know from experience to take change in stride. Real estate is cyclical (and even somewhat predictable, as you will see in this month’s Market Action Report). The market needed a course correction, and 2023 was just that. As for all the speculation and uncertainty looming as we head into 2024, well, we personally feel optimistic for a really great year ahead, and we don’t think it’s blind optimism.
The Market Action Report for November, referenced in this article, can be viewed by clicking the attachment link at the bottom of this article.
Rates: All signs seem to point to rates holding steady and even improving in 2024. 2023 was a year of needed correction. With the balancing out that followed dramatic mortgage rate increases, pricing has stabilized and consumers have had time to adjust to the new normal. Some home buyers and sellers held off on the decision to sell or buy due to the dramatic changes in rates during 2023, but demand is still there. Small reductions in rates (like we saw last week!) can encourage buyers to get back in the game, and potentially signal to sellers as to the timing of their sale.
Inventory levels: See the attached Market Action Report, page 2, for a chart showing total inventory in months (formula = current active listings / the current rate of sale). We’ve highlighted January’s and November’s levels for the past 3 years, and you can readily see the needed upward trend. From having less than 1 months’ worth of homes available for purchase in November of 2021, we now have around 3-3.5 months’ worth of inventory available for buyers to choose from. This is still well below a balanced market of 4-6 months of inventory available. Until this number climbs above 6, we won’t have dramatic downward pressure on pricing. And because we still have pent-up demand, we just don’t see that happening in 2024.
So where is the correction happening?
There is still currently a supply and demand problem. As such, we still consider this a seller’s market, though on the spectrum of sellers’ markets it has trended away from an aggressive seller’s market to a pretty mild seller’s market. Multiple offer situations still happen, but now they are very few and far between. In the vast majority of transactions in 2023, there was give-and-take between both buyer and seller in order to agree on terms. This leads to a correction, not necessarily in decreased pricing, but in pricing not continuing to skyrocket upwards (see below).
Pricing: On pages 2 & 3 of the attached Market Action Report, you will see that we have highlighted the Year-to-Date decreases in new listings, pending sales, and closed sales. 2023 Year-to-Date unit numbers, when compared to the same period in 2022, are down about 20%. In the next paragraph (bottom of page 2) you can see that that rolling 12 month average sales price decreased by 2.4% and the median sales price decreased by 3.1%. This is a nominal decrease in average and median prices, and the chart on page 3 helps to shed additional light on how that is broken down. The annotations at the top of the page compare the decrease in unit sales from both the average, under $700k price point, and the median, under $600k price point. This doesn’t mean that your home lost 2.4% of its value last year. In our opinion, these numbers demonstrate that the market is correcting from the past couple of years when these comparisons were showing increases between 17-20%.
Should you sell in 2024?
Well, if you do believe 2024 is the time to sell, we hope you’ll reach out! We would love to talk more in depth about what that might look like for you and how we could help. In the meantime, take a look at the graphs on pages 4-5. As a seller, the best time to sell is when inventory is lower. Less competition means better terms for you! Notice the Active Listings graph at the top of page 4; inventory swells in the last half of the year. That’s when you want to be buying.
Notice the New, Pending, and Closed graphs; they all follow a similar curve, climbing at the beginning of the year and peaking toward the end of spring/beginning of summer. Contrary to popular perception, January, February, and March are great months in which to list; buyers have come out of the busyness of the holidays and are ready to begin the search again.
If you made it this far, thanks so much for reading this year-end update.
As always, we sincerely appreciate you, our clients. Thank you so much for entrusting your business and your referrals to us. If and when you do send someone who is looking to buy or sell in 2024 our way, make sure they let us know so we can properly thank you!
All the best,
The McCreith Team | www.themccreithteam.com
To Email: Joni McCreith
To Email: Catherine Summers
To Email: Amy McCormick
To Email: Molly Barajas
For a full, in-depth analysis, download the PDF below.