Marty and Max: How's the market doing?
Marty Walker and Max
| July 21, 2023 1:00 AM
The housing data reflects that the housing market is surprisingly resilient. Our crisis, however, is that there is not enough inventory, rather than not enough buyers.
Home prices are not down.
How will the market hold up this fall?
July 1 is normally the tipping point for the year in regard to both price reductions and inventory. Last year we had a second interest rate spike late in the year and inventory rose while demand decreased. Last week there were 464k single-family homes for sale. We should finish the year with fewer homes on the market than last year. There is a common miss conception of how to achieve more inventory. Most believe that when mortgage rates fall the result will be more inventory. The data however shows that higher mortgage rates result in more inventory. If you have a 2-3% mortgage, are you selling while rates are over 7%? Probably not.
They are fantastic investment properties. When holding cost rise, inventory follows.
In 2020 interest rates were lower and inventory shrunk. In 2022 interest rates increased, and inventory followed. Lower rates generate demand but not supply.
How do we get more inventory?
Our experts predict that multiple years of higher interest rates will generate greater supply. Inventory forecast for the rest of this year is that inventory will climb slightly for the next few months and then will taper off towards year-end. Our experts expect about 425k single-family homes on the market in the new year.
Last year new listings tanked in July and there were 115k new listings compared to 82k this year.
Last year there were 420k under contract and pending homes began to exceed those available on the market. This year there are 381k homes available, 9% less than last year at this time compared to where we started the year at 35% lower.
The price of pendings have slightly exceeded last year's pending price. Those that went into contract this week far exceeded last year's price and for the last five weeks this year has outpaced last year.
Medial Price is $452k nationwide and we expect that will be flat year over year by September and should end the year flat or slightly positive and we expect gains in 2024. If a major recession hits all of this can change. If you are a buyer and are waiting for the crash, you may be waiting a very long time as most predict higher prices to come IF rates do not spike and IF there is not a major recession. Price Reductions are a leading indicator of future transactions. Currently, 32.5% have taken a price cut which is in the normal range. During the pandemic, there were record lows in price reductions.
How’s the local market?
This week the median list price for Kellogg is $384,500 with the market action index hovering around 37. Inventory has increased to 16. The market has been cooling over time and prices have recently flattened. Despite the consistent decrease in Market Action Index (MAI), we’re in a seller’s market (where significant demand leaves little inventory available). If the MAI begins to climb, prices will likely follow suit. If the MAI drops consistently or falls into the buyer’s zone, watch for downward pressure on prices. Inventory has been climbing lately. Note that rising inventory alone does not signal a weakening market. Look to the Market Action Index and Days on Market trends to gauge whether buyer interest is keeping up with available supply.
Marty Walker is a licensed real estate professional and paid consultant. Information shared in this column is of a general nature. For specific questions in relation to your unique property, email to set a time for a consultation. Visit MartyandMax.com or email Martywalker@remax.net.