More Surprises in Store
Continuing the conversation… looking at sales data for 2023 and noting that prices have remained surprisingly high (much higher than expected given doom/gloom projections and rumors circulating about the market’s demise.)
In spite of all the negative news, the median and average prices for single family residences (SFR) in SC County in May were $1,373,750 and $1,633,599 respectively. Those are amazing numbers even for a market that’s consistently offered up the unexpected since the start of the pandemic.
Even more surprising is the fact that through the first five months of 2023, we’ve had the fewest SFR sales ever for that period by a wide margin (including 2008 when the economy was in shambles and 2020 when shelter-in-place shut the market down!) To date, only 399 SFRs have sold in SC County. That number pales in comparison to the 659 SFRs homes that had already sold last year (2022 went on to have the fewest annual sales ever.)
A huge drop in the number of buyers isn’t much of a stretch considering Interest rates have more than doubled (30yr rate went from 3.22% in January 2022 to 7.08% in October 2022.) And when you add in all the other factors that have hammered the market since March 2022: inflation, stock volatility, job insecurity, recession fears, war in Ukraine, more buyers going awol makes perfect sense. It’s hard to muster the resources and the courage to buy when debt ratios are skyrocketing and fears about the future are rampant.
But that begs the question: If demand has decreased by such a wide margin and there are so many fewer sales, why haven’t prices also come down? When all those buyers disappear doesn’t that throw the relationship between supply/demand out of whack and start impacting the price homes are selling for? Isn’t that economy 101?
In theory it does, as long as new listings are coming on at their normal seasonal rate to juice the supply that’s also already growing due to fewer sales. Right now, the supply of homes on the market should be shooting up but that isn’t happening. Instead, inventory numbers are still hovering in low territory despite all those sales disappearing.
In a market that’s been defined by low inventory levels for more than ten years (2013 is when historic lows first started) there’s a new twist: the number of new listings coming on the market is now trending lower than any of its previous record lows. Even as more buyers are choosing not to buy a lot more Sellers are also opting not to sell.
Next Week: Where have all those new listings gone?