It may have been a full year, but this market is changing fast
Happy new year! I hope your holidays were full of family, fun, and health! Overall, it felt like the real estate market ended the year in a much different place than 2021, but as we look at the year-end stats, we see that some trends (like median price) continued on the same pace as 2021. This summary is an in-depth look at last years market, as well as some opinions on what to look forward to in 2023!
Condos prices continue to blaze
Starting with a quick recap for the month of December, you’ll notice mostly red and grey arrows, which would normally signal a swing in the market. Closed sales are down across the board and time on market is up to over three weeks. A little deeper dive reveals that the market is not in the swing you’d expect, mostly due to the fact that new listings are not flooding the market. Buyers still have very little inventory to choose from and Sellers are holding strong with their list prices. I’m expecting this trend to continue for most of the first-half of 2023, especially as the mortgage rates continue to fluctuate.
New listings are still down
For the entire year, we a huge decrease in new listings in both the condo and single-family home markets. The condo inventory was positive for the first five months, but then took a sharp downturn in June and ended the year 11.8% below 2021’s count. Single-family homes were also down year-over-year, showing a 13.5% drop versus 2021. In my opinion, this is one of the main reasons why Sellers have not begun cutting prices, and as long as their neighborhoods continue to show low competition, they’ll have no reason to do so in 2023.
Active inventory is starting
The two biggest stats this past year were median days on market (DOM) and months supply of inventory (MSI). The average DOM that a listing sat on the market started the year at 12 and 14 days for single-family homes and condos, respectively. At the end of the year, those numbers jumped to 25 and 21, respectively. MSI or the number of months it would take to sell all available inventory rose from 0.8 to 2.1 for single family homes and 1.6 to 2.2 for condos throughout the year. With the sharp rise in interest rates throughout the year, it’s not surprising that listings sat on the market for longer. As interest rates continue their current trend, it will take buyers to get used to this financing market and adjust their expectations. Meanwhile, Sellers can expect longer marketing times while waiting for a good Buyer but Buyers should also not expect Seller’s to settle or reduce prices quickly.
Median prices still rising
In spite of all those trends, median prices rose again in 2022. Single family homes saw an 11.6% rise year-over-year, while condos saw a 7.4% increase. Like I mentioned above, it’s going to take a while for the current buyer climate to settle for us to really get a good feel where the 2023 market will go. If interest rates continue to rise and inventory continues to sit, we should see a plateau on prices as buyers lower their affordability expectations and sellers adjust. If rates settle for a couple months and buyers get used to the current rates, we may continue to see slight increases in prices as inventory remains low. Either way, there could be some good opportunities for both buyers and sellers, depending on their specific situation.
If you are considering buying or selling in 2023, reach out and let’s talk story! I’m always down for a coffee or conference call, and I can help you better understand your specific situation better.
Otherwise, have a good 2023! I wish you nothing but health and happiness throughout the new year!
Nick
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