We have indeed entered the holiday slowdown with a big decrease in new listings MoM. All figures are down MoM, and we even saw prices decrease YoY. However, don’t look too much into this, as condo sales mainly caused it. November last year saw a big spike in the median sale price for condos, probably due to multiple luxury condos selling that month. However, the median sale price retreated to normal the next month.
|
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
Homes for Sale |
+17% |
-12% |
|
New Listings |
-7% |
-35% |
|
Homes in Escrow |
+8% |
-13% |
|
Closed Sales |
+7% |
-17% |
|
Median Sale Price |
-1% |
-3% |
House prices were up YoY by 2%. Admittedly, that’s not a lot, but it is not far from what is widely considered the average of 3% appreciation.
Prices Have Dropped
Last month I was surprised to see prices go up MoM. This month's numbers are more in line with what I was expecting. 90% of transactions I see on the MLS are closing below the asking price. Motivated buyers who have been okay with taking on the higher interest rates have used this to their advantage and negotiated lower prices. Since December mainly consists of buyers looking for a deal, expect the December prices to be lower.
Interest Rates
The latest economic data has favored the Fed reducing the Fed Funds Rate next week. This will likely be a .25% decrease. Mortgage rates are unlikely to drop right after the announcement as this Fed decrease should already be priced in. But we will see. Despite the general feeling that mortgage rates are high, they are roughly .5% lower than this time last year. Part of the reason the beginning of this year was really hot was due to the rates coming down during the holidays last year. Given rates are lower now, does that mean the beginning of 2025 will be a repeat of this year? We shall see.
2024
This year defied logic. When rates go up, prices are supposed to come down. But they didn't for most of the year, simply because of the lack of supply vs demand. It was also one of the worst years in recent history for real estate transactions. The combination of rising interest rates, lack of inventory, wars, economic uncertainty, and the election, just to name a few, all contributed. With so much noise on a daily basis people didn’t want to make the biggest financial move of their lives. For the homes that did sell, the common theme amongst them was that they were good homes that were move-in ready, in good locations, and priced reasonably. If a home didn’t have all of these, it would sit. Buyers were understandably picky, given how much it costs to borrow money. On the flip side, some sellers thought we were still in 2021 and didn’t price their homes based on what buyers were thinking. As a real estate agent it was a very challenging year, and we saw many agents drop out. Thankfully, I have amazing clients who continue to work with me again or refer me to friends of theirs. So, for me, this year wasn’t as bad as other agents.
2025
Agents and economists mostly agree that next year will vastly differ from this year. We have been in a slow market for 2 years, and now the election is behind us; there’s a strong belief that people will agree next year is the time to make a move. The question will be, how many homeowners will be ok giving up their rate in the 2%’s or 3%’s? That is the wildcard that could hold back the market. However, as we’ve seen before, if buyers decide to enter the market in droves and inventory remains low, we will see prices increase again.
