Market Report: Q1 2023
Opinion: Chris' Thoughts
The housing market in 2023 has been extremely interesting. The national news includes headlines such as the US News article "When will the Housing Market Crash?" or Business Insider reporting that the "housing market is close to bottoming", but is that the case in our local market?
We have seen our market slow from red hot to hot. It is still a strong seller's market and very difficult for home buyers. We have seen our inventory (number of homes for sale) continue to drop while sustaining high demand despite higher interest rates. Days on market is another leading indicator of the market and despite homes staying on the market longer than in 2022, homes are selling fast. Price has also continued to increase, albeit at a slower pace than last year, and still faster appreciation than average for our area.
Inventory is our biggest problem. There simply aren't enough homes for sale. This has been a pattern over the past four years, with less retirees deciding to move and more retirees from NY, NJ, and PA deciding to move into Delaware for more affordable housing and tax benefits. Covid expanded the problem as we had a migration from the cities to the suburbs as buyers spent more time together and now had a serious need for a home office. Most recently, increased interest rates have cause would be seller's to hesitate, since they likely have 3% interest rates and lower monthly costs than if they were to downsize with a 7% interest rate.
I want to share with you some of my experiences with the market this month. I been involved with buyers or sellers that have properties receive only 1 or 2 offers, a handful with 10 offers, and one property had 24 offers. I have also seen a lot of properties that have gone under contract within a day or two and cancel their open house. One of my listings had 59 showings in the first 4 days! If there is a property that is in a great location, move in ready, and appealing to a wide audience, it will sell quickly. The seller friendly offers I have seen this quarter include tens of thousands over asking price, appraisal gap coverage, no inspections, delayed settlement or rent back, and cash offers.
For buyers, there are a few points that can make you feel optimistic. The list to sales price is no longer at or above 100% so there is potentially room to negotiate, although the examples with multiple offers will consistently go above asking price. The appreciation has slowed, so if you miss out on one house you won't need to pay $20k+ more for the same house six months later. And statistically, there has been more seller's assistance this quarter than during 2022, allowing you to potentially have to bring less money to settlement.
Whether you're planning on buying, selling, or both, it is vital to understand the current real estate climate so you can put your best foot forward to get the best house at the best price. Let's dive into the data.