Let’s take a look at the reasons why and what the latest NAR report show that helps us understand this:
Looks like home sales, currently at their low point, are bottoming out. Existing home sales continue to fall in January, but medium home prices are still rising. What’s going on? The National Association of Realtors reports that home sales are down 37% compared to a year earlier. But home prices depend on a market’s affordability which means lower priced areas show modest growth, and more expensive regions show sales declines. Also, when there’s not enough homes for sale, home sales prices stay higher.
As a buyer, what properties should you look at? Homes sitting on the market for more than 60 days are being purchased for 10% less than the original list price. Homes that need some cosmetic repairs are also target properties where a seller may lower their acceptance price and those properties may have been on the market for 60 days and have had “low-ball” offers rejected, so find the reason why the seller needs to sell, make sure the property checks out, and make a “Good Offer!!”
Key points from the National Association of Realtors latest housing report:
Days On The Market: 54% of homes sold in January were on the market for less than a month in January. It was 26 days in December 2022 so that is a slight increase.
First Time Homebuyers. They accounted for 31% of sales in January up from 27% a year earlier. That’s a slight increase since competition is down. Buyers are buying, regardless of interest rates higher and qualifying for less of a total loan amount.
All Cash Sales. 29% in January 2023 up from 27% in January 2022. Investors and second homebuyers tend to buy in all cash sales and they were 16% of these buyers in January 2023, down from 22% in January 2022. When they find a good deal, they buy!
Distressed Sales. These include foreclosures and short sales. They are a very small share of overall sales. Only 1% of these sales occurred in January 2023, matching the same level of January 2022. Looks like the predictions for a market crash and homeowners bailing out is not happening.
The West Coast. Existing home sales increased 2.9% in January 2023, but still down a whopping 42.4% from January 2022. Medium price is now $525,200 down 4.6% from January 2022. The “Pandemic High” of crazy homebuying due to the lowest interest rates of all time are gone.
The San Francisco Bay Area. We are experiencing a slowdown in sales, less homes for sale, and those sales are from people that need to sell, for example, must move to a larger or smaller home, life events, like divorce, or death in the family, needing to move in or out of the area due to job relocation.
