How's the Market?
The real story on where the housing market is NOW.
Knock on wood
Back to Normal - CoreLogic forecast
Where have all the listings gone?
1.) KNOCK ON WOOD
Lumber futures fell back to where they traded in February of 2020 before the pandemic ignited a boom in housing and stretched supply chains to the limit, according to data compiled by Nasdaq. Prices continue to be volatile, but a steep decline in demand for new homes may finally be taking pressure off the strained supply chains that service homebuilders.
"In earlier months, builders had been scooping up more lumber than they needed, fearing that prices would only rise further." A top employee at a lumber wholesaler recently told The Wall Street Journal that "this run-on lumber is now over."
Even with lumber prices coming back down to earth, it doesn’t mean that all construction materials are affordable again. This further underscores what our market data shows -- there is incredible opportunity for move-in ready homes to sell at top dollar and fast. Last month, 4 out of the 6 properties that closed between $5-$10M in Montecito were move in ready, recently updated homes, and all spent less than 27 days on the market, selling at or above their listing price.
2.) BACK TO NORMAL
CoreLogic released their Home Price Index report, showing that homes rose by 13.5% year over year although prices declined by .7% in August. CoreLogic forecasts that home prices will remain flat in September and rise 3.2% in the year going forward. This is important – Although we are seeing some negative readings month to month, they still forecast over 3% nationwide over the next year.
Throughout this week mortgage rates held steady. The UN has called on the Federal Reserve and other Central Banks to halt interest rate increases for fear that it could send the globe into a recession and disproportionately impact vulnerable nations.
If you take 2019-2022 and the 1980s out of the equation, our 30 yr. fixed mortgage rates normally fluctuated between 4-8%. Currently we are closer to the 6-7% range, which is certainly at the higher end but still “normal”… Fed Vice Chair Brainard and Fed Voting Member, John Williams did say that the policy has begun to cool demand and reduce inflation. Williams believes that inflation could cool to 3% next year, which would cause interest rates to drop significantly.
3.) WHERE ARE THE LISTINGS?
The number of homes for sale these last few weeks has been falling as we continue to see a steady rate of closings and not a lot of new listings.
Last week in Montecito we had 38 active listings, an all time low, with only 2 New Listings but 3 Closed sales. Already this week we have seen 2 closings and an additional pended sale as we near the close of this week.
Montecito’s low inventory and continued buyer demand has puts us above the national norms and keeps us in a Seller’s market.