Cooling Market, but….

It’s subtle, but the market is slowly cooling. We’re seeing less new inventory. The existing inventory is becoming stale. The number of escrows is down significantly. All of this being said, we still only have 4 months supply of inventory. That may suggest that we’re not in a buyers’ market yet. List price versus sale price is tending down, but really negligible. Finally, pricing is relatively flat for the last 4 months.

So what’s the takeaway? We appear to have 3 different variables all working in conjunction with one another: rates, inventory and pricing. It appears that an awful lot of buyers are happy to wait for lower rates. We are not seeing more new inventory, but the existing inventory is hanging around. Some of the pent up inventory is waiting for lower rates too. Most homeowners are experiencing the golden handcuffs effect where they don’t want to give up their low interest mortgages to take on much higher rates for a preferred home.

Prices held firm through rate hikes because our inventory and volume of transactions plummeted in comparison. Good news for all parties involved, rates are dropping. Lower rates makes the exact same price for a home more affordable. Just like prices held through rate hikes because of low inventory, if inventory is rising and rates are dropping this ought to provide justification for prices to stay steady or increase. This would increase affordability without increasing prices and open the door for a lot more transactions for both buyers and sellers.