--- Return to Erika's Website ---
I couldn't sleep last night. I tossed and turned, trying to get comfortable until I finally took my laptop to the sunroom so I wouldn't wake my husband.
As I sit here at daybreak in my Middle Tennessee home, I'm starting to think about the new week we are beginning, and to be honest, it won't likely be a pleasant one for most of us.
Most Americans will find it hard to be optimistic about our economy as abysmal Q2 earnings are reported by many of our most financially successful companies. The stock market will react accordingly, and as if that's not enough, the fed will conclude its dreaded July meeting on Wednesday, likely raising the funds rate again, since our latest inflation report came back so high.
What does this mean for us?
This means we may see job layoffs, our stocks will take a hit, we will likely be officially declared "in a Recession," and mortgage interest rates could spike again.
If all these things come true this week -- which is likely -- the decreased intensity among Buyers in Real Estate will undoubtedly continue.
This is an interesting place we find ourselves in Real Estate, though, because our market here in Middle Tennessee generally runs at a slower pace this time of year regardless. Williamson County is a school-driven market, and a lot of families travel, or at least lay low in business mode, when school is out. In a normal year, we usually have one last push in the market between Labor Day and Halloween.
You've probably heard me say by now that we're resembling more markets of the past. Let's see how our local market compares between the years.
Comparing Markets
June is the most recent month that we have market stats for, since July is not yet closed. Looking at all the single-family residential homes that sold in Williamson County during June 2022, we had a 15% decrease in the number of homes close since 2021 -- 528 homes closed versus 622 homes closed county-wide.
The numbers seem to be fairly consistent for our little pocket of Williamson County here in Grassland, with an 11% decrease in the number of June sales year-to-year.
BUT -- I dug deeper into the numbers for Grassland, and of all the homes that have sold during each June in the past 10 years, our average home sales in Grassland is about 55.5 homes sold.
Most years bounce around that 55 number, as you can see in the graph I made. This year, we hit it right smack dab on the nose.
It's also interesting to note, there is a near-consistent zig-zag above 55 and below 55, alternating almost every year. If you've followed me long enough, you've heard me say perspective is everything.
Danielle Hale, Chief Economist for Realtor.com says, "The housing market is not as hot as it was last year. But compared to any pre-pandemic year, it's still a pretty hot real estate market."
Mining more Details
In Grassland, our Days on Market have actually decreased -- by more than half. Days on Market fell from twelve in June 2021 to five in June 2022, even though it feels like homes have been lingering on the market longer than we've been used to.
And get this -- Our average June sales price is $1,113,453. This number is 7% lower than the average sales price in June 2021, though homes are selling for 3.7% above list price. I'll explain this in a minute.
Confused Yet?
It's hard to make sense of the data and reconcile it with what we're seeing on our streets, hearing in the media and noticing with reports from across the country. But this is why I try to focus on what's happening here, in our own back yard. I pour through our market's data to find the answers to the questions we're all having right now about our own homes so we know exactly what's going on with our homes, and can make the best decisions possible.
So, to explain what seem like contradictory numbers above: The reason our June 2022 sales price is lower than June 2021 isn't because home values are decreasing -- which would be most people's immediate conclusion. It is because the homes sold in June 2021 were smaller -- by almost 400 square feet!
- The average Grassland home sold in June 2021 was 3,547 sf.
- The average Grassland home sold in June 2022 was 3,158 sf.
At the average price per square foot that we're selling for, a few hundred square feet makes A LOT of difference. This difference in price per square foot is likely due to builders slowing down sales, either due to supply constraints or a pull-back on their leverage.
To close the gap on our average sales price difference, the average Seller decreased their list price per square foot from June 2021 to June 2022 by $9 dollars, homes are still selling at only a $5 dollar per square foot difference than they were a year ago -- the average Grassland home is still selling over list price! It's just that Sellers are pricing lower. This is likely why we're seeing a considerable drop in our Days on Market, too. Buyers know a deal when they see one!
So What's Next?
I cannot emphasize this enough: Don't be surprised to hear doom and gloom this week. It's going to happen and you'll feel like the sky is falling, the world is ending and we're knocking on the door of another Great Recession. Also don't be surprised to feel a pause in the market. This happens every time there's a change in world events, mortgage interest rates, the stock market and a hint of an economic downturn.
But remember what happened during the 2008 Recession? If you're reading this blog, then I bet you do. And so does any other American who was living and working during that time. There are a lot of people hoping for a repeat of that, rubbing their hands together with a grin on their faces, hoping to have another chance at buying homes on clearance.
Only this time, there are wildcards. For one, the number of Buyers (aspiring homeowners and investors) far exceeds the number of homes for sale -- by the tune of HALF of the inventory we had in 2019, and even 2019 was considered scarce.
Builders are cutting back on construction, largely due to investors backing them, freaking out about the markets and not wanting a repeat of being "on the hook" like they were in 2008. So if builders weren't keeping up before, they'll really lose traction now, adding to the inventory crunch.
Foreclosures, though inching up now that the moratorium has been lifted, are not expected to move the needle much because Lenders have tightened and mostly eliminated their predatory lending practices since the Great Recession. And a high foreclosure rate is usually what moves the needle on seeing deep discounts on homes, like in 2008. See this chart by Attom Data for the latest national foreclosure numbers:
Finally -- what could be a cherry on top if we do head toward hardships nationwide -- mortgage rates typically fall during economic struggles. And we all know how that can play out.
Plus, homeowners have more equity now, and have exercised HELOCs to hold onto what they've got and help build more wealth.
On that note, I expect we'll see job losses and there will be a period of time soon where the economy is not what it was. But because so many of us have spent the past 15 years waiting and preparing for another "crash," there will be more competition than ever if prices do drop. And I believe this will provide a "floor" to our values.
Worst case scenario -- Will we see a 5% decrease in our values over the next 2 years? Possibly.
Will we see a 19.7% dive like we did in the Great Recession? Not likely.
The important thing for us here in Grassland is to stay realistic about our market conditions, filter out the fear and noise, and lean on the facts.
For questions about selling or buying a home, please reach out! I'm a Grassland area resident and a Multi-Platinum Award-Winning Williamson County REALTOR ranking in the top 1.5% of agents in Williamson County. I am a Million-Dollar GUILD Member of the Luxury Home Marketing Institute, my market insights are regularly featured in broadcast media, and my success planted me on the front page of a December 2021 Nashville-area Magazine. But most importantly, I specialize in helping my friends and neighbors buy and sell homes.
Comments