To quote Vann Pennell, former principle at St James High School and human being extraordinaire, “there's a reason the windshield is bigger than the rear view mirror”. We should certainly focus more on the future than the past. That said, we researched 2023 to learn as much as we could to help us make better decisions in the upcoming year. It is important to see where you’ve been so you know where you’re going. As always, we focus on the larger picture: supply and demand.
In 2023, we saw supply of properties increase. We started the year with 3.1 months of inventory and finished with 3.8. This increase is small but it does reflect a shift in more properties for sale for buyers and more competition between sellers. To put 2023 into perspective, 2022 saw a meteoric rise in inventory with historic lows of only 1.1 months supply and ending with 3.1 months of inventory. Historically, a balanced market includes around 5-6 months of inventory so our levels still favor sellers but we’re in a much better position that we were during the pandemic.
I’m inferring demand by taking a look at price. In 2023, the average price started in January at $366,685 and finished in December $376,157. In any market when supply increases and price increases, demand had to increase as well. This is an amazing statistic considering historic mortgage rate increases and demonstrates people’s desire to live in our area.
Another key metric that jumps out when reviewing the data is the number of expired and withdrawn properties increased in 2023. Comparing the numbers to other years, this is the first time this has happened in more than a decade. This represents a change in the market where sellers are less guaranteed to sell their property. Many owners have “tested’ the market and found that there are limits to what buyers are willing to pay. We always run market activity for our clients and review not only properties but also expired and withdrawn properties so we can use lessons learned from failed listings when helping our sellers make the best decision.
What does this mean for buyers and sellers in 2024?
The market is constantly changing. With mortgage rates predicted to come down, 2024 is most likely going to see higher buyer demand. With higher demand typically comes higher prices. The unknown is how significant the rate decreases are when they are announced. If the rates are dropped once every 3 months at 0.25 decrease each time, this will more than likely cause an increase of activity with home prices continuing to rise. However, if the rate decreases are more severe with .5% or .75% cuts, this could spark pandemic level competition and market craziness. While good for my seller clients, I hope this doesn’t happen for the overall health of the market.
Takeaways:
Sellers should continue to use comparable properties to price their property to avoid having a listing expire or withdraw without selling. Listen to the market. If you’re not getting showings or offer, adjust your price or make significant improvements to the home’s condition based on feedback. Explore credits to entice a buyer.
Buyers should take advantage of the highest supply of inventory in 3 years and work with a seller that is willing to negotiate repairs, credits and price to create a win/win.
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