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September 2022 HAR Report Review

Written By: Alex Buriak | November 14, 2022

Time to Read 4 Minutes

According to the report, the normalization of the market continues and continues to trend that direction. You may notice that I used the word normalization and not slow down, crash, or anything like that. In this market, yes, there are some changes that are showing some troubles in the sales aspect of the market, but as we go over, there is not a supply side issue where there is too much to buy, we are still in a low inventory market. 

This is the sixth straight month that sales were affected by the lack of inventory, inflation, and rising interest rates. In September, there was a small increase in inventory that will help boost supply. I have to go over the data in which it stands today, comparing 2021 to 2022, but just like comparable homes when evaluating real estate, there really is no comparison to what we experienced in the last 3 years to today besides going back to evaluating normal market conditions. Be that as it may, I will still give you the statistics. 

In comparison to September of 21, SFH homes decreased in sales 17%. There was a total of 7,664 units sold compared to the 9,235 units sold in 2021. With this added statistic, 2022 is trailing 2021 numbers by 5.1%.

As we discussed in previous reports, the big winner on the sales aspect is the $500,000 to $1MM home segments which increased by 12.6% and the 1MM+ segment that rose 7.2%. I still propose the argument that you are seeing these numbers climb since most of the inventory that is left on the market are these two segments. 

The key to this has been the record appreciation this market has seen over the last 3 years. Home prices continue to increase even as this market normalizes. Yes, we are seeing less asking or above asking closings, but we have yet to see any markable decline in property value. September 22 SFH average price rose 11.6% to $414,776 and the median price increased 14.7% to $343,950. Arguably, the price of the properties that are selling are weighting those averages, but consider this, even with the rise in inflation and interest rates, these properties are still selling.

Well, everything is all good then... right? Not exactly. As an investor, you still have to be able to pivot and change your calculations in transitioning markets. I am definitely not telling you not to buy, you will hear that a lot, "I am going to wait for the crash to buy" or "I am going to wait until "X" to buy", you should still be investing in this market. What I am saying is if you are flipping properties now, you need to pay attention to your actives, pending and solds, your days on market, really pay attention to your competition listings and their finishes. Not that you shouldn't have been doing that, but the last 3 years have been so bullish, that even the investments that were not competitive were selling for top dollar. Those days have ended. Above I stated that year-to-date, we are down 5.1% from last years record pace. That is a good and bad observation. With everything that could possibly be happening in our market, inflation, interest rates, midterm elections, we are only down 5.1%? Seems pretty healthy and lucky we live in a market where the demographics continue to be in our favor for job growth and new arrivals. But we have to pay attention to the trend and prepare. Total Property Sales from 9/21 to 9/22 are down 17%, total dollar volume sold is down 8.5%, total active listings are up 36%, Ave SFH sales price is up 11.6%, SFH Median sales price is up 14.7%, SFH pending sales is down 15.5%, and we still currently stand at a 2.7 month inventory.

The 2.7 months of inventory is a number I like to watch. It is the highest its been since July of 2020 when it was a 2.9 months. Nationally, the country sits about a 3.2 month inventory supply today. Jet Lending team feels a 4 month supply is a balanced market and National Housing Economists feel its 6 months that is balanced. Balanced means neither the seller or the buyer has the advantage. We just disagree on that. If you were selling your house and it took 6 months to sell it, you are more willing to negotiate. 

That is another thing about statistics, and as an investor, use them but don't get buried in them. Statistics show you the math that is going on in a particular variable but it doesn't tell you the story. You need both to make an informed judgment. Here is an example, SFH prices in the $1-99,999, $100,000-$149,999, $150,000-$249,999, and $250,000-$499,999 have all decreased in sales. from 11.3% to 44.7% decreases in sales for these housing segments. Does that mean these houses just are of no interest? Not at all, there far less of these that are selling because there are very few of these properties for sale. Remember, do not just look at the numbers, up or down, but look deep into the trends and the way these numbers are obtained to see what is really going on in your market.

I will leave you with this on this report, continue to buy investment real estate. the 2-4% of properties investors buy has been relatively less effected by what is going on and is even helping some investors negotiate better to start buying properties like they used to before everyone was paying 10-30% over asking. The distressed market is where we live. Properties that need to close quick, that need repair, that the seller needs a problem solved so they can be made whole again. The decrease in listings? Well, let me ask you this, if you have your home today at a 2.5% 30 year mortgage, are you looking to get rid of that rate or are you going to try to stay where you are at until the rates come back down? That is one of the reasons you may not be seeing so many new listings. Well what should you do? One of the best things you can do in a market that doesn't have enough product, make more product. As an investor, look at these markets that have hardly anything to sell and provide that to the market. Continue marketing to you 2-4% of the distressed market, make a beautiful, well made product, and put it out there to sell or rent.  For the consumer that is waiting or rates, the rental market is going to continue to increase in these times of transition. In times of transition, it tends to be a good time for the investor, so don't miss the boat, but get with a good team to help sail you the right way. We would be glad to help.

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