Grassland Monthly Real Estate Recap: September 2022
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Whip out the backyard tent, honey. We are spending the night under the stars.
The kids were excited, yard games set up, s'mores were aplenty and the grill burned hot.
The burning fire is a stark contrast from the real estate market, though. We've all noticed a change in the way Buyers and Sellers are interacting.
A market cool-down is typical this time of year, as we head into Fall and all of the holidays, though we didn't see it the past couple of years. Pre-pandemic, a market cool-down was as welcome as Fall. This year, however, the dramatic rate of our cooling off -- and expectations for more-- is what has a lot of us paying close attention to what's going on -- and next steps.
Grassland Dips in Prices
Here at home, we've seen a dip in our average sales prices year-to-year. By the end of August, we had 32 homes sell in the Grassland school zone, which is lower than the last three Augusts. It's 24% fewer homes that sold last month than in August 2019.
Our homes sold last month were priced from $410,000 to $5,460,000. Our average sales price sits at $959,922 -- a 6.8% drop from a year ago.
Our homes are still moving, though. The average home sold last month went for 99.52% of list price -- almost full price -- after an average of only 9 days on market.
In Williamson County
You may have seen the update I posted Saturday on my social media pages. We actually sold more homes across Williamson County in August than the month before. But our average sales prices are down by about $105,000 month-to-month. Still, this puts us at a 7% value gain year-over-year. Here's what our value changes look like, from August 2019 - August 2022:
You can see in August of 2019, we were hovering around an average $596,000 sales price.
August of 2020, we jumped to $714,000.
August 2021, we were selling around $968,000 on average.
Last month, August 2022, our most recent closed month is averaging $1,037,000.
This is a 43% increase in home sales price averages here in Williamson County compared to pre-pandemic. And this is among the reasons Buyers and Sellers in our county are reacting differently to inflation and spiked interest rates compared to other spots across the US.
Equity As Money
It's true, Nashville got overheated. This is among the reasons we're seeing decreases in prices right now, though we still have A LOT of equity built from these past couple of years. In Williamson County, many of our home Buyers and Sellers have bought and sold homes before -- especially in the Grassland area. Because of the equity they've gained in their current homes, quite a few of my current Buyer clients are feeling like the market is finally in their favor. Not only are we no longer seeing home values rise, but competition has backed off thanks to the combination of the typical seasonal real estate pattern and affordability. Frankly, a lot of Buyers cannot afford the combination of these high prices and interest rates. So those who still can are buying without competition.
My current Buyer clients can be divided -- almost equally -- into three categories as far as how they're paying for homes right now:
- The traditional financing route where a Lender funds the purchase and the Buyer has saved a certain amount of money for a down payment. And now that so many people have a large amount of equity, they're using a HELOC on their current homes as a down payment for their next home.
- The second third of my Buyers are paying cash. Remember all those cash Buyers that came out of nowhere the past couple of years and were winning bids with it? They're still out there! And instead of using their cash as leverage in a bidding war, they're using it to avoid paying higher interest on a loan.
- The third set of my Buyers are using a HELOC on their current home (since they have so much equity), and are able to make their entire next purchase as a cash purchase with this money. Then, when they sell their current home, they'll be mortgage-free. This method is typically best for down-sizers.
I'm not advising you use one method or another -- I'm just sharing my observations on the creativity in our market right now, and the increased options many people have, thanks to the recent boost in home equity.
Many people didn't have ANY options during the Great Recession. I think, here in Williamson County, we may be able to hold out a lot longer than most areas, rather than sell short, this go-around. Since the Great Recession, the Williamson County government has worked to further insulate us from job force lay-offs, and our current equity could provide a cushion as well.
Bumps in the Road
You've seen all the headlines about inflation at a 40-year high. You've crunched all the numbers with these mortgage interest rates soaring over 6%. And at this point, it doesn't appear either of these things will come down any time soon. The only thing losing its footing right now is the stock market.
The global economy is sliding toward recession and The Fed is meeting again this week, with its Monetary Policy Decision due at 1pm CT on Wednesday (9/21). It'll be no surprise that they'll raise the funds rate in order to stay aggressive on fighting inflation. Of course, the stock market and mortgage interest rates will react accordingly. Here's what to expect in the days ahead:
- There will be multiple reactions in the stock market.
- An immediate reaction when the decision is read.
- A half hour later, there will be another reaction when Chairman Powell hosts his press conference about it.
- A third reaction Thursday after the market sleeps on the news.
- Mortgage interest rates will react. We've seen them go up, we've seen them go down -- sometimes surprised by their reaction when we thought they'd go in another direction. Market confidence has a lot to do with it.
- You will see A LOT of opinions about it all -- most of them will tell you the sky is falling. The Fed is trying to slow inflation, lower asset prices, slow demand and even create unemployment. It sounds counter-intuitive, I know.
Keep in mind, it's basically controlled chaos, and it'll get worse before it gets better. We will likely continue to see our home sales prices soften in the near term. But if all goes according to plan, the "worse" will make it better. The Fed raising rates to slow inflation, lowering asset prices, decreasing demand and creating unemployment are good for mortgage interest rates and the control of rising home prices, for that matter.
It's safe to say the sun is officially setting on the insane Seller's market we experienced these past couple of years here in Grassland. And the days of paying $1,000,000 for a home with the amenities of a tent are gone -- for now.
--- Return to Erika's Website ---
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.
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