- Tom BrezsnyWhere is the Market heading
Continuing the conversation… We’re analyzing the data, trying to gather a little more perspective on the twists and turns we’ve noticed in the market during the first half of 2023.
The market hit its all-time high last year (March 2022) when the median price for a home in SC County soared to $1,600,000! It was a brief, cathartic moment in time that couldn’t/didn’t last and hence there are plenty of sellers out there today kicking themselves for not jumping on the opportunity. It’ll be quite a few years before we approach that price point again.
More than a year later, interest rates are hovering around 7% and a slew of other challenges are impacting the market: stock volatility, inflation fears, rumors about recession, job losses and war in Ukraine. Even though most folks think we’re already in the middle of a downturn, home prices continue to be surprisingly high.
The rapid rise in rates has taken its toll and unquestionably, demand has decreased. Fewer buyers can afford to buy even if they want to and a host of other buyers are choosing to sit the market out, hoping that rates will matriculate back down to the magic 3% level. That’s not a great bet – If you look up the average interest rate for the last 30+years, it’s almost exactly 7%.
With the drop in demand, it’s no surprise that we’re on pace for a record low number of sales this year. What is a surprise is that prices are at their highest levels since the peak. When there’s less demand and a lot fewer sales, prices usually start dropping.
But they aren’t. And that’s because the low inventory market we’ve grown accustomed to over the last ten years has found a way to notch itself down even lower than the previous historic lows it’s been at. So far, the number of new listings coming on in 2023 is at its own all-time low as more and more sellers are choosing not to sell.
There may be less demand and fewer sales but the supply has now fallen so low that even those fewer buyers are still competing for the very few quality listings coming on. That competition continues to drive prices.
If we’re trying to guess what’s going to happen over the rest of 2023, we have to start with two big questions: Is there anything on the horizon to suggest that rates will go down or that the number of sales will increase? Is there anything on the horizon to suggest that a lot more sellers will put their homes on the market soon?
More Next Week…
