September Real Estate Market Update
It’s a new month, but it hasn’t gotten any easier for buyers out there. Quite the contrary, it’s getting tougher every day. That’s great news if you are a seller though.
What’s driving this? In short, huge demand that inventory simply can’t keep up with. Homes are selling at such a feverish pace that active listings are plummeting across the board, further lowering our months of inventory available to buyers.
Pair all of this with a national lumber shortage which is driving up the cost of materials for both builders and investors, we are seeing significant spikes in listing prices. It’s a perfect storm for builders right now riding this wave. As their cost goes up, they pass those along to buyers. The buyers will gladly pay because there is no inventory and they are trying to capitalize on historically low interest rates. So builders are getting the proverbial “pass” on their increase in expenses. Last week the average 30 year fixed rate was 2.875%, so buyers are scrambling to capitalize on historically low rates, especially if they are planning on staying put in the home for a while.
Everyone I talk to in the real estate industry is expecting a slow down to come eventually. It doesn’t seem like it will happen in 2020 the way things are going. Will it happen Q1 or Q2 of 2021? Hard to say. Here in Texas, we may not feel it as significantly as other parts of the country due to the strength of our localized economies, but eventually it’s coming. We still have a moratorium on evictions and the courts will be backed up for a while handling the wave of foreclosures that will come at some point. The real estate market typically has lagging indicators when it comes to a recession. Meaning we don’t see it in the housing market for quite some time even though we feel it in other areas like the unemployment rate.
One thing that may save the real estate market and help us weather the storm of an economic downturn is the incredibly low inventory. We can withstand A LOT of inventory to hit the market and still be balanced. We are also dealing with home owners who have equity, so they can sell instead of turning their keys over to the banks even if they are facing financial hardships. This is great news with investors trying to find WIN WIN situations with home sellers.
For all you data junkies like me. Here is the breakdown on the numbers in each of the 4 major Texas Markets showing year over year changes.
- Median Sales Price: $355,000, Up 11%
- Closed Sales: 4,019, Up 12%
- New Listing: 3,862 only Up 1%
- Active Listings: 4,257 Down 44% (Wow!)
- Pending Sales: 4,533 Up 40%
- Average Days on Market: 42 Days, Down 10 days
- Months of Inventory: Currently at 1.4 Months, Down from 2.6
- Median Sales Price: $265,000, Up 8.4%
- Closed Sales: 38,647, Up 8.9%
- Active Listings: 79,145 Down 29.1%
- Average Days on Market 51: Up 1 day
- Months of Inventory: Currently at 2.6 Months, Down from 3.8
- Median Sales Price: $270,000, Up 7.6%
- Closed Sales: 9,195, Up 6%
- 3 Consecutive months of positive sales
- Average List Price: $345,742, Up 7.7%
- New Listings: 11,474, Down 6.1%
- Active Listings: 19,652, Down 32.7%
- Median Sales Price: $259,600, Up 9%
- Closed Sales: 3,693, Up 7%
- New Listings: 4,021
- Active Listings: 7,258
- Pending Sales: 3431
In my 16 years of selling real estate and the thousands of transactions we’ve had here at ListingSpark, I don’t think I’ve ever seen the market this tipped towards the seller’s side. Seeing the months of inventory dropping is an unsettling feeling because I know this much of a shortage will continue to cause pandemonium in the market. I am a fan of a more balanced market with a predictable level of sanity. With that said, like I mentioned above, I’d rather have a shortage of inventory when the eventual increase in foreclosures and home sellers needing to sell floods the market. In 08, we had the opposite conditions and we all know what happened then. An already saturated market saw a title wave of inventory and it took several years to recover. That may not be the case this go around.
So I will tell you what I tell everyone else when they ask me if it’s a good time to sell? No…..It’s a great time to sell, arguably the best time to sell that we have seen in a generation. Will home values continue to climb? It’s certainly possible that we continue to see a “run up” of values, but it’s very difficult to predict the top. So if you are debating over selling now or 6 months from now, I tend to recommend now because the numbers don’t lie and no one has a crystal ball to predict how things will look in 2021.
Aaron Jistel Broker/Co-Founder
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