Franklin Monthly Real Estate Recap - September 2023
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This Real Estate market, though! It's like sitting in rush hour traffic at Mack Hatcher and Franklin Road, moving from a slow crawl to gridlock. There's an obstacle at every corner.
Many Sellers are staying put. They're not aggressive right now in the Real Estate market. Those who would normally be trading up are living longer with the homes (and low interest rates) they already have.
Buyers continue to pump the brakes as well, though they're not at a full stop. Continually increasing home prices combined with the higher interest rates are eating up more of their household incomes. And when you mix in a lack of available homes to choose from, it's a trifecta of mental taxation. But at the end of the day, people need a place to live. And even with the obstacles, there are still more Buyers than Sellers in this market.
So the Sellers putting a perfect home on the market right now -- fully updated, move-in ready, level lot, etc. -- are still going Under Contract quickly, providing a win-win for all parties involved.
Something's Gotta Give
Lower mortgage rates are our biggest hope for affordability in the foreseeable future. We're either going to need a drop in mortgage rates or in our home prices, in order to see some loosening in our Real Estate market, and it's not looking likely that we'll see homes lose value any time soon. Our incredibly low inventory has provided a pretty strong floor on our prices. But a mortgage interest rate decrease will entice Sellers to let go of what they have, and will help Buyers with affordability. Even a 1.5% dip would make a noticeable change in our real estate traffic jam. But after a strong jobs report Thursday (low unemployment), the market freaked out, and rates spiked again.
At last check Wednesday, mortgage interest rates are the highest they've been in more than 2 decades (see the Mortgage News Daily report, attached). The good news is, it's not looking like mortgage interest rates will tick up much higher than they are now. And if they do, it likely won't last long. A lot of those who have < strong > full-time employment predicting this are in alignment, with many economists expecting we could start to see mortgage interest rates come down as early as Q1 2024.
If housing prices weren't so high, I'd bet the sticker shock of today's higher mortgage rates would be worn off already and it would be business as usual. Even as rates continue to rise, Fannie Mae forecasters think we've seen the worst of the damage to our home prices caused by mortgage rates. There are so many cash purchases right now, with Attom data reporting about 38% of all residential purchases in Q2 2023 were all-cash. So many homeowners with a mortgage owe HALF of what their home is worth, due to all this equity increase, so interest rates don't really play a huge role to a lot of discretionary Buyers, since they'd be borrowing so little. We also have enough people who *have to* buy and sell that the market is still moving without the discretionary Buyers.
Local Movement
Locally, it's much of the same story, just more dramatic. It's pretty clear that we still have more Buyer demand than Sellers here in Franklin, Williamson County and in the Greater Nashville area as well. In fact, even moreso than many other areas across the country.
In Greater Nashville, we've seen our first year-to-year increase in median sales prices in a while! Also, our year-to-year decrease in the number of Closings is shrinking by the month. Only a 7% decrease in Closings this August compared to August 2022.
Williamson County continues to come in strong with Year-to-Year median sales price increases, a decrease in Days on Market and an increase in Closings, though inventory has not increased. This is a huge indicator that there are more Buyers entering the market than Sellers. They are basically out-pacing demand, in Williamson County, anyway.
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A leading indicator to watch is the nationwide increase in mortgage loan applications. These have consistently risen week-by-week during September, according to the Mortgage Bankers Association.
In years past, this month is typically when I've noticed Buyers gear up for a final push before the holidays, hoping to snag a home and perhaps have more leverage in negotiations. It's a great strategy, really, if you can find a home that would work for you.
That's the big "if" standing in a lot of people's way right now.
Inventory Shortages Continue
Nationwide, there just aren't enough homes For Sale. It's going to take a while for us to build out of this -- I predict closer to 2030, due to quite a few key variables I've been watching since 2020. It's all playing out, so far, exactly how I predicted 3 years ago. I'll share those variables if you want to reach out to me directly. Meanwhile, it's safe to expect our home prices will continue rising until then. 2024 will likely be the year when the market starts picking up again and though it won't be anything exciting, it'll be a slow grow back to the movement we enjoyed in 2019 and prior.
Right now, though, the blue line shows how our current inventory here in Williamson County compares to years past:
Mark Zandi, Moody's Analytics Chief Economist says, "I don't think it's going to get any better. But I don't think it's going to get any worse-- because it can't get any worse." He's referring to inventory, and therefore affordabiity.
Silver Linings
With the number of Closings remaining stable year-to-year locally, this shows us homes are still selling. Buyers are still buying. Sure there are fewer choices right now, but if you can find something that works for you, this time of year is one of my favorite times for Buyers. Kids and parents are distracted with all the school happenings and extra-curriculars. The Spring and Summer market rush is over. People are gearing up for the holidays, and window shopping has taken a backseat to football season.
You know the Sellers in the market right now are motivated. Likewise, Buyers in the market right now are serious.
I'm not advising all of my clients to jump into the market right now -- this market is not for the faint of heart. But there are quite a few people who this market has and could benefit, even (or especially) today. And for those people, it's green lights and no detours. It's a calm before the storm.
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Thinking of moving? Need a plan tailored to your needs? I'd love to help you. I'm a Franklin resident and a Multi-Platinum Award-Winning Williamson County REALTOR ranking in the top 1.5% of agents locally. I am a top producer within Benchmark Realty, the largest brokerage in Tennessee and among the largest in the country. My continuing education includes several designations and my experience keeps me up-to-date with fast-changing market trends. 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. Why look further when you've got a friend and neighbor who is among the best in the business!
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