Prices are up! Although this is more than likely a blip in the market caused by a couple of factors, I will explain below. We saw a very active first few months of the year. However, just in the past couple of weeks, I’ve noticed a slowdown, and we will see if that’s also a blip or a growing trend.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|
Homes for sale |
+11% |
+7% |
|
New Listings |
-38% |
+16% |
|
Homes in escrow |
-25% |
+24% |
|
Closed sales |
-36% |
+39% |
|
Median sale price |
-4% |
+5% |
Last month I talked about quality homes flying off the shelf, and these closed sales numbers reflect that. It’s frustrating to see new listings are still dramatically down YoY. Homes for sale YoY has also been declining each month this year. Except for the brief banking crisis that caused interest rates to drop, it’s still discouraging news for buyers.
Prices Are Up
There are a couple of reasons why prices are up so much in March. First, there was a significant increase in closed sales compared to February, and when a lot of homes are selling, this increases the median sale price. Secondly, the deadline to sell your house before ULA (Mansion Tax) kicked in was April 1st. Therefore, there was a big increase in sales above $5M, that in turn pushed up the median price. There were 283 sales above $5M in March, compared to 143 in February. This, of course, is a one-time event, so we will see where prices land for April.
Interest Rates
Recent data shows that nearly 30 million homeowners have an interest rate under 4%, and almost 20 million have a rate under 3%. Until rates are in the 4’s, these homeowners will hold onto their homes. For those owners who can buy a new home without selling their current home, keeping and renting their property out would be an almost no-brainer, as the rent would cover their monthly costs. Especially homeowners who have owned for a while, refinanced into a low rate, and have low property taxes. The more homeowners do this, the more strain it puts on inventory.
Banking Crisis
It appears the worst of the SVB fallout is behind us. There were fears this was going to be the start of something much bigger, but thankfully that doesn't seem to be the case. The silver lining of this fallout was that it caused investors to buy heavily in bonds, which caused mortgage interest rates to drop. This happened roughly around the same time the Fed raised rates by .25% and is a great example of when the Fed raises rates, it doesn’t always mean mortgage rates will rise. It has more to do with investors and their feelings about the stock market. If investors are worried, they move into bonds, and this causes bond yields to drop, which in turn causes mortgage rates also to drop. Mortgage rates are the lowest they’ve been in 6 months.
