Heat & Rain – Lots of Rain In June
2018 real estate is quite different from 2017 in some price points, but quite similar in others.
First of all, regardless of the price ranges, this year has been odd. We have gotten used to home buyers banging on doors in January and sellers being accommodating. This year the door knocking began around the first of March, which is what our market was used to prior to 2014. So is 2018 really a different year or just a return to a more normal market? Let’s take a look!
Market Activity by Price Points
This is where my Month of Inventory graphics come in to play. First thing you should notice is that there is very little blue in these charts. Blue represents an Even or Balanced Market. When looking at the Month of Inventory broken down by the three Buyer Pools representing the First Time Buyers (Under $200k Price Point), the Move Up Buyers ($200k – $400k Price Point) and the Premium Buyers ($400k and above), there is a distinct difference in the buyer pool above $400,000. This price point is in a solid Buyers Market meaning that homes are not selling anywhere near the pace on average compared to the lower price ranges. That creates confusion and frustration for the upper end market sellers when all they see on social media is that “Realtor X” sold a home in less than 12 hours while the upper end listings are sitting there getting showings but not getting offers. Home buyers in that price range have the luxury of being able to shop for their next home, sleep on any decisions and be fairly confident that the home they looked at last week will still be there if they are interested in making an offer. The sellers market extends all the way up to $400,000.
The bottom part of the graphic breaks the market down into $100,000 price points and the only blue you see (indicating an Even Market) is currently in the $300,000-$400,000 price range. I would anticipate that by this time next month, that price point will also be in the Buyers Market category as many buyers curb their home search in July and August, giving their attention to vacations and summer fun activities.
Second Quarter Continues The Rise of the Mortgage Interest Rate
Mortgage interest rates did dip briefly at the beginning on April, but the overall trend so far as of May 31st (This graphic is provided by Freddie Mac and they are about a month behind on reporting). But you can see that as mortgage interest rates rise, home affordability goes down. This may not play as big of a factor in the lower price ranges as a change in the interest rate is proportionately smaller, but when you are in the upper price ranges looking at a higher mortgage interest rate AND rising home values, the cost benefit of moving up may very well be playing a factor in the move up buyers decision to move right now.
What about all this rain in June and especially as of June 30th with heavy flooding?
How will this affect the real estate market moving into July and August? I’ve already mentioned above that July & August are already slower months in the real estate market and now we have to deal with the issues of homes with basements flooding (or worse) and sellers on the market now having to amend their sellers disclosures. And let’s face it, most home buyers, especially first timers do not want to buy a home that has a history of having water in the basement. Unfortunately, we are now adding a new notch to the measuring stick. It is pretty common to review a sellers property disclosure and see a reference in the section regarding any past water in the basements and seeing “flood of 1993” or “flood of 2008” followed by “no problems since. Well, now we will be seeing “flood of 2018″… How will that affect home buyers and their decision to move now? Only time will tell!
So let’s look at the rest of the market stats as of the end of June
Monthly Market Snapshot as of June 30th
Resale property inventory is currently making up just over 60% of all homes for sale with New Construction bring the remaining approximate 40%. The majority of sales activity was within the resale market during June and this has pushed the New Construction Months of Inventory well into a Buyers Market. Another milestone for the month of June was registering 1,000 closed sales in New Construction and a total almost 7,000 sales overall.
2018 Year Trend Reports
Active – Pending – Sold – Balance of the Market
Compared To 2017
(Click Graphic To View Full Size)Home for sale trends show that more homes are on the market year to date compared to the same period last year. This is giving some buyers a chance to find their home before being involved in a multiple offer situation. The Pending Sales graph in yellow showed a distinct leveling in June vs a decline during the same time last year. This activity is predominantly sales in the under $200,000 price point.
Home Inventory and Pending Sales Compared Over Time
(Click Graphic To View Full Size)
This graphic allows you to see how Home Inventory and Pending Sales both compare to different points in time from a week a back to as far as 9 years back.
~Les Sulgrove, Broker
VIA Group REALTORS
If you are interested in selling your home or purchasing a home, give me a call! I will help you determine your best strategy based on your local market data.