It’s kind of more of the same, said Terry Wollam, broker at Wollam and Associates, when asked about the latest market action real estate report.
As of the November report from the Regional Multiple Listing Service, there were 522 active home listings. Not all of those were readily purchasable or move-in ready, however — 13 had purchase contingencies, 93 were under construction and 104 were proposed but not yet being built. The total number of available homes was 312. If you’re looking to buy a house, there’s slightly less than two weeks of inventory.
“That’s not normal,” Wollam said.
That means all of the homes on the market are selling, and it’s happening twice a month. In a healthy market, turnover would happen in 60 days, the broker said. For all active listings, the inventory was slightly more than two weeks, which is what inventory dipped to in December of last year. There’s been less than a month’s worth of inventory all year.
Normally, sales decrease in November and into December, which seems to be the case this year. There were 810 closed sales in November of this year and 897 in October. Last year, there were 825 closed sales in November, but Wollam warns 2020 is not the best comparison. There were 18.9 percent more closed sales this November than there were in 2019.
There were 741 new listings on the market, which is down 893 from October.
The median sale price in November came in at $483,500, $1,500 less than the median sale price in October. However, the same metric was $410,000 in November of last year.
Typically, appreciation in home value is seen most in the first part of the year, when activity starts to build up. The best indicator for where home prices are trending is to look at months of real estate inventory. With such a low inventory, expect prices to continue to rise.
“It’s not sustainable, but I’d see prices increasing like they did last year. That’s what the market shows us,” Wollam said.
Still, interest rates are rising, which will mean that a homeowner’s monthly payments will be higher even if home prices don’t increase.
Because of this, Wollam said that he expects next year’s price increases to be smaller. Inflation and rising interest rates will play a part. But how much inflation will impact interest rates is not certain.
With rising interest rates and rising home prices, Wollam said activity could slow down.
“We’re starting to push limits as it relates to home prices and income,” Wollam said. “When we see interest rates increase, it impacts people’s mortgage payments, and that’s going to add additional pressures for pricing.”
That doesn’t mean sale prices will go down anytime soon, however.
“It’s going to take a long time for inventory to build up for the increase in pricing to slow down,” he cautioned.