Happy New Year! 2023 is now in the books so let’s take a look at how the year finished up.
The number of new listings in December was down 3% vs. December 2022, and declined nearly 37% vs. the prior month (vs. a 24% drop from Nov ’22 to Dec ’22). So the number of new properties coming to market was consistent with what one would expect during a seasonally slow time of year for real estate.
With fewer new listings, and some being withdrawn for the holidays (some sellers “take a break” during the holiday season), inventories declined and there were fewer price points with 12+ months of inventory. Higher price points still have more inventory, but the year ended with less than 6 months of inventory in Austin overall (~4 months) and Central Austin (~5 months).
Interest rates came down from their October highs (~7.8%) and we ended the year at around 6.6%, which is only a little above where 2022 ended (6.42%).
Despite that improvement in rates, new pending transactions still looked very similar to where they were in 2022. December 2023 saw a 1% increase in new pendings vs. December 2022 and a 6% drop from November (vs. no drop from Nov 22 to Dec 22).
To summarize pricing, here is my refreshed analysis of the Goldman Sachs prediction from a year ago. Prices dropped in 2023 from the 2022 peak of 650K but are still higher than what long term appreciation rates would suggest.
2023 ended up at a 606K median sold price overall vs. an expected 507K based on long-term appreciation rates. Prices might need to come down some more (perhaps 10-12%) to be back on the historical trend. Or other factors like low inventory, improving interest rates, and a strong local economy might provide support for permanently higher prices.
December showed a small uptick in transactions, which is typical. You can see in the graph below that all prior years had more sales in December vs. November. It is noteworthy that 2023 had 13% fewer sales overall vs. 2022, and was well below the last normal year of 2019 (down 34%).
Hard to say what 2024 will have in store for us. Predictions of multiple interest rate cuts coming soon were challenged by Friday’s jobs report and the potential for a more resilient economy and stubborn inflation that could lead to rates staying higher for longer (which is what the Fed has been consistently saying for quite a while now).
But people still need to move for a variety of reasons, and so there will continue to be buyers and sellers trying to navigate this market for the best possible outcome with the least amount of pain.
What does that mean for the luxury home buyer?
There are more choices out there, and fewer buyers chasing them. That suggests there may be more flexibility from sellers on terms.
What does that mean for the luxury home seller?
There is a lot of competition. It is absolutely critical that your house stand out in order to entice buyers. Homes need to be in tip-top condition. I never recommend trying to guess a buyer’s tastes or extensively remodel your house based on assumptions of what will appeal. The best approach is to shift to neutral colors and make sure that the house looks and feels well-cared for.
Trying to make sense of the market? Let me help! Contact me for more information and market analysis, and how to best go about buying or selling a home (or both) in this market!
And I appreciate referrals! If you know someone that may be in need of assistance with a purchase, sale or both, please share my name or feel free to make an introduction.