As I gear up for my 2023 Sarasota County housing market forecast, this month my focus is on active listings, which are a forward looking indicator on how prices are trending.  In October, the year over year median active list price for single family resales was unchanged at $599,000.  Approximately 40% of all active listings had a price reduction, and only 2% a price increase.

Prices have plateaued. However, do not confuse that with prices depreciating. Although there are more homes for sale, 997 active homes for sale in October, inventory remains sufficiently low, 3.2 months based on pending sales, to keep us in a slight seller’s market. Notwithstanding higher interest rates, which have pushed more buyers to the sidelines, demand remains strong. 

The sold to original list price was 92%, sold to final list price 95%. Homes are no longer selling over list price. This is not the time to drive the market up.  Listing a home at fair market value is critical. 

A word of caution. For the first 2 weeks in November the median sold price was only $460,000.  In October it was $532,000.  How the month ends will send a strong signal on how prices are trending as we go into 2023.

Observations:

• Mortgage Rates.  At 7%, mortgages are 80% more expensive than 1 year ago. This has massive implications.
• In early summer, when rates went to around 5%, the housing market slowed, but kept moving.
• After the 1^st week in September, there was a spike in rates, buyers went cold.
• If rates stay at 7% range, the market will slow down.  If it goes to 5 – 5.5% range, sales will pick up.
• Listing volume is very low, but transaction volume is even lower, so supply is up.
• Inventory is still 30% lower, based on pending sales, than the end of 2019.
• If inventory grows into November, it is bearish for pricing.
• Sellers have experienced significant growth in equity.  Barring employment, health or lifestyle changes – minimal motivation to sell. So, at 7% interest rates, there is a bit of a tug of war between buyers and sellers.
• If there is a major recession with job losses, inventory will increase.
• Amongst the most important variables is job losses.  When it breaks 4.5% (currently 3.7%), that will be the first sign that the Fed is getting control of inflation. Mortgage rates will be the first to come down. It will reaccelerate the housing market.

I am grateful for your monthly readership, thank you.  May your Thanksgiving be filled with the warmth of family and good friends.