July housing inventory supply grew to 1.9 months supply, up from 1.18 months back in May. The $250,000-$299,000 almost doubled from .23 months to .41 months in July.
July Housing Inventory Supply Grew
Every single category grew in supply, so it is across the board. The market has slowed from a few months ago. Everything over $600,000 grew in supply by over a month. Inventory is growing while closed sales are falling. Pending sales are also declining, which is a forward indicator of future closed sales.
Because we watch the weekly inventory levels and the pending sales, we had a pretty good idea what was going to happen. We’ve been reporting that single family inventory bottomed out February 15th while condo inventory bottomed out February 8th.
Closed sales prices lag these other indicators, so we knew it was only a matter of months before it started showing up in the sales prices, assuming the trend continued. The trend has continued, so here we are.
Did you Have the Talk?
Realtors are forced to have honest conversations with sellers about where to price their home. Nobody sees a major decline in prices like we had in 2006 and beyond, but we could see some declines as the economy possibly enters recession. We may have some hangover effects from rising interest rates as well. Some say the ultra-low interest rates allowed for prices to balloon where they did, and when you take those away you take away the home affordability and the market stops.
The market doesn’t really stop but it feels that way in a shift. Buyers are reluctant to pay today’s prices in fear of the market moving lower. Sellers tend to want yesterday’s prices and cling to last month’s headlines. Each side backs into their corner until the realization sets in. Until each side recognizes the market of the moment, a stalemate happens.
Both sides eventually agree that it is either time to buy or sell, and the sooner they do that the better off their family will be. Right now, we are in the messy middle whereby each side has not figured that out yet. Sure, lots of sales are occurring, because the buyer and seller are motivated and accept the reality of today’s market. Others want to test the market by listing above the market, only to reduce again and again later. Buyers are guilty too. Some lowball and strike out again and again. They feel frustrated but comforted by fact they’ll be able to pick up a home tomorrow at prices lower than today.
Lock in Interest Rate Now
The problem is when rates are going up, lower home sales prices tomorrow still cost more than higher priced homes today. Locking in those rates is crucial. We’ve had a temporary pause in rates as the market reacts to recession numbers, but those interest rate hikes could pick back up again in a few weeks.
Buyers are in a better position today than a few weeks ago. Inventory has grown while rates have slipped back about .75%. Selection is better and purchasing power increased about 8.25%. When rates go back up in a few weeks, that 8.25% purchasing power will be wiped out.
If you have a house to sell, call the Ellis Team at 239-310-6500. If you are interested in buying, call our buyer specialists at 239-489-4042 or visit www.LeeCountyOnline.com
Our team is here to help you navigate this tricky market. Our agents are trained on market conditions and how this affects you.
Don’t forget our Hurricane Party Giveaway too. Head on over to www.Facebook.com/Ellisteam to find out how you can win the hurricane party package which includes a generator, snacks, gas can, flashlight, batteries, and other stuff.
Good luck and Happy Selling!
Hurricane Party Prize Package