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Welcome to Buyers Market 2023?
Yes, home values have slipped, reversing a historic upward cycle. Nationally, median home prices in April were down 2.7% from a year earlier. In California, they are down nearly 8%. Google searches for “homes for sale” are down about 15% from those all point to a year earlier, and purchase applications are down 32% from the same period last year.
So, homes are sitting and inventory is up, right?
No. New home listings dropped 19% (year-over-year) in early May, contributing to a surprising monthly decrease in total inventory. Concurrently, pending home sales were down 16% from the previous year, reflecting the scarcity of listings and the squeeze on potential buyers, challenged by mortgage rates exceeding 6% and record-high monthly payments. Moreover, mortgage-purchase applications have risen 5% on a seasonally adjusted basis. The current pool of buyers, though small, is resilient, with almost half of the homes listed selling within two weeks – an increase over the last month and an unusual trend for this season.
The Crystal Ball – What’s Next?
The current market condition highlights a paradox; fast sales amid few listings, suggesting a complex scenario for buyers and sellers. Unless listings increase substantially in the short term, any semblance of a “Buyer’s Market” is likely to be short-lived. Demand is building, and buyers waiting in the wings will not wait forever.
