Franklin Monthly Real Estate Recap: March 2023
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But what I'm talking about right now is another rise in mortgage interest rates -- and how the market is (or isn't) reacting. We peaked in October 2022 at 7.09% for a 30-year fixed rate -- the highest fixed rate BY FAR in at least 20 years. It certainly pushed the pause button on Real Estate with fewer Buyers in the market this fall.
As mortgage interest rates started going down November through January, Buyers became more active again. At the same time, Sellers continued to pull back from listing their homes For Sale, thinking Buyers weren't in the mood. Builders have also pulled back on new construction due to increased costs and more complicated financing. As we continue into Spring, the Buyer demand is still there, likely from a pent-up Fall, but even fewer homes to choose from.
Now, mortgage interest rates are almost what they were in October (7.01% as of today, March 8th). You'd think that would produce the same Fall-like crickets. But with Buyers still competing for homes, outnumbering homes For Sale, we're still seeing Buyers lose in multiple offer situations as recently as this weekend! To put it simply, this market is unlike anything anyone has ever seen.
What We're Seeing Locally
As I type this, there are currently 1,535 single family homes For Sale and Under Contract on MLS in Williamson County. Our median list price is $1,199,900. Median Days on Market for these homes is 37, which is up dramatically from this time last year, but it's really not bad and falls in line with what we've seen lately in DOM for Closed homes. (I was actually expecting Active DOM to be higher).
In the past month (February 8 - March 8), 287 homes sold. Using these numbers, we have about 5.3 months of inventory, or supply of homes, in our current market. This means it would take just more than 5 months to sell everything Active and Under Contract at our current pace, if no new homes hit the market.
According to the National Association of Realtors, 6 months supply is historically associated with moderate price increases, and lower than 6 months of supply leads to a more rapid increase in sales prices.
For perspective, our national months supply first hit the bottom at 1.9 months in December 2020. That's when we started to see the dramatic escalation in our sales prices. Our supply levels have been climbing upward since April 2022. Mortgage interest rates can typically be directly correlated with this.
Year-to-Year Translation
As our months of supply increases, typically that creates downward pressure on sales prices. The graph below shows how that's affected us closer to home. The market appears sporadic, but there *is* an overall trend of rough stability -- with prices hovering around the $850,000 median sales price mark here in Grassland. This is about an $83,000 reduction in sales prices from February 2022, which could be largely attributed to Sellers listing lower than they did a year ago. (No more lofty "let's see if we can get this" list prices). As you can see, month-to-month, the market temperature changes. Timing the market is a real shot in the dark lately (although my Fall prediction that December would be the best time to buy has continued to be spot on.)
FAQ's
There's a lot of "whys" behind all the nuances of this current market. So I'll run through the typical questions I'm getting right now, with answers:
- Why aren't our sales prices taking a bigger hit? Inventory is low.
- Why is inventory low? Builders aren't building as much and Sellers may not want to sell right now for two reasons: They've got low interest rates and they've got options if they don't think they'll get the sales price they want right now (thanks to all the equity).
- Are there more Buyers than Sellers? The data suggests yes. There's a lot of pent-up demand from the past 11-months.
- Is it a good time to buy or sell? It depends on your needs. Our Real Estate market has become volatile, and it may never be un-volatile again, thanks to Wall Street hopping into the market. Just like stocks, it's almost impossible to time the Real Estate market nowadays. Make the decision that best suits your needs at the time that is best for *you.*
It's important to keep everything into perspective as you navigate and execute your next move. If you're wanting to sell, prices have dipped, but they're still higher than 2 years ago. Will they go down much more? Likely not here locally, but anything can happen to change all the models. If prices go down further, it probably won't be much or last for long before a rebound happens.
As a Buyer, interest rates are daunting. But looking at the below graph, we're still below the average weekly rates recorded by Freddie Mac over the past 50+ years. There's still plenty of room for these to get worse. I'm hoping a year from now, we're not reminiscing on the days of 7.01%.
Chart represents weekly averages for a 30-year fixed-rate mortgage. Average for 1971-2023 as of Jan. 26, 2023. Source: Freddie Mac PMMS. (c) TheMortgageReports.com
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Need a plan tailored to your needs? Reach out! I'm a Franklin 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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