January 18, 2024

Interest rates drive inventory and home values. If you need to sell in this market, you must align your expectations with current market conditions. Gone are the days of multiple offers.  Expect more days on the market and buyer’s in the driver’s seat.

It’s been a great run, but real estate is cyclical.  The shift from a seller’s market to a balanced market is in place, with a decided buyer’s advantage of more homes for sale, price cuts, and longer days on the market.

Sarasota County single-family home sales.  As of the close of the year, here are the facts:

1. Price Reductions. 44%. (30% is the historical norm).
2. Price Increases. 1%.
3. More Homes for Sale.  Up 39.4% from last year.
4. Days on Market Increasing.  Up 25% from last year.
5. Median Price of New Listings. $569,000.
6. Median List Price (new and price adjusted listings). $539,900. Down 5.2%.
7. Median Sold Price. $520,000. Down 8.6% from median price of new listings; down 3.7% from adjusted list pricing.

As rates go higher, inventory increases, prices lower.  When rates go lower, inventory decreases, prices rise. In December, the Federal Reserve’s guidance was restrictive, penciling in three .25% rate cuts for the year. The Fed’s concern is unemployment remains stubbornly low. If it cuts rates too aggressively, it fears stoking inflation.

Currently, the average 30-year mortgage is 6.60%. If mortgage rates climb back to 7% or higher, it will push buyers to the sidelines, inventory will grow, prices will fall. If rates fall under 6%, it will accelerate buyer demand, reducing inventory and raising prices. 

One thing is certain. The days of ravenously higher prices, multiple offers, and sales over list price are gone. Price your home where the market is, not where you want it to be. And know this, notwithstanding recent market corrections, your home has likely appreciated at least 35% since February 2020, pre-COVID – a fine return by any reasonable measure.