Last month I observed that the number of new pending sales the week prior to Labor Day was the highest since May. That would suggest that closed sales 3-4 weeks later should see a spike as well, which happened (the week of 9/25 was up over 30% vs. the other weeks of September). But September overall was still down significantly vs. previous years (-36% vs. 2021).
And you can see that things were tracking with prior years through March, but starting in April transactions slowed relative to prior years and consistently under-performed since then.
There has been impact on market activity due to the interest rate increases this year. The following graphic shows the number of weekly new pending sales with the dates of the Fed’s interest rate increases noted.
But perhaps the biggest story is the dramatic increase in months of inventory (MOI). Six months ago the Austin Board of Realtors’ (ABOR) monthly market report indicated that months of inventory had crept up 0.1 months to 0.5 months of inventory. Remember that 6 months of inventory is viewed as a balanced market. So that was still very much a seller’s market… multiple offers, homes selling over asking price, very low days on market.
Obviously the market has shifted since then. And while the overall MOI number is helpful for a general barometer of market health, I think it is also critical to look at such information by price range. So I have broken out months of inventory as of the end of this first week of October based on a few different price ranges.
As you can see, in the price ranges below 2.5M, the market is healthy and still leans towards a seller’s market, though not as pronounced as it was in 2021 and earlier in 2022. But in the higher price points, over 2.5M, there is a lot of inventory piling up (and many more private listings not reflected in these numbers).
What does that mean for the luxury 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 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 and remodel your house based on assumptions of what will appeal. The best approach is to use neutral colors and make sure that the house is well-cared for.
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