July was the first month in three straight months that that 'Close to Original List Price Ratio' for SFH went from above 100% to 98.9%. That doesn't seem that alarming but it does shed some light on a shifting market that is cooling down from the home heat wave we have seen over the last few years. With that in mind, we are still in an inventory crunch. Buyers may be more apt to buy at listing price or negotiate some, but inventory is still low which is still giving some advantage to the selling side.
Is inventory still low... yes, but it's definitely something to keep an eye on. In July, we reached a 2.5 month supply in the Houston market. That is a jump from last month and it's back to what we were seeing around August 2020 when we were at a 2.6 month inventory. I still say low since here at Jet, most real estate economist believe 6 months is a balanced, we believe a 4 month inventory is balanced and a 6 month inventory gives a buyer a slight advantage pushing into a buyers market. So yes, we still have an inventory issue in this market, but you have to pay attention to that the market is trending upward each month. It's not something to fear, its something to prepare your business strategies on how you are buying your investments. Remember, there is no buying market and selling market, there is just the market. Each market you are in, you can make a great deal of money if you plan for the market you are investing in.
Single Family Homes sold fell 17.1% in July with 8,370 units compared to 10,102 last July. But here is another interesting statistic, "Strong sales among higher- end priced homes pushed pricing up again but not to record levels". The median price climbed 12.7% and the average price rose 9.9% to $348,740 and $426,494 respectively. What can we say about this? Well, is it that the higher priced homes are selling more because there is very few lower priced homes on the market? It is something to consider. HAR Breaks it out into segments:
Broken out by housing segment, July sales performed as follows:
$1 - $99,999: decreased 39.4 percent
$100,000 - $149,999: decreased 34.9 percent
$150,000 - $249,999: decreased 49.6 percent
$250,000 - $499,999: decreased 9.2 percent
$500,000 - $999,999: increased 40.6 percent
$1M and above: decreased 52.5 percent
Why are we seeing such a decrease in properties value below $500,000 sales? Have you looked at the growing actives recently? There is not a great wealth of them to pick from under $500,000. From HAR "The average sales price rose 10.4% to $427,931 wile the median sales price jumped 11.5% to $340,000, the second highest of all time". Even with the decrease of sales, the statistical values are still up since that is what is for sale and that is what is selling. There was a 17.4% decline in units sold year-over-year and we are beginning to see pre-pandemic pace of SFH sales. The Days on Market on the SFH inventory stayed stagnate at about 26 days on average.
Remember, these are just statistics and numbers of large quantities of data. This is supposed to give you insight on the market as a whole. Is it healthy, is it not, how do I pivot in a changing investment environment. This does not take the place of pulling comps, looking at your potential finishes on repair, analyzing DOM in your area. This is a birds eye view. Always laser focus on your subject property on how it is and may compete in your market.
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