Happy Holidays friends! I want to start this months video by expressing our sincere gratitude to everyone who has worked with us or supported us this year. We consider it a great honor to walk alongside our clients to help them make one of the largest financial decisions of their life.

There is great news for home buyers right now. Mortgage rates had fallen almost a full percentage point from their highs earlier this year.

And most “in the know” experts expect rates will continue to decrease in 2024 with predictions of mid 6’s by the end of 2024. This should provide a huge boost to buyers who were priced out of the markets this year.

Additionally, the monthly supply of housing, largely regarded as the most objective indicator of market strength, has been rising over the past quarter (meaning the market is easing). It’s still well below the 3 month average we need for a stable market, but at least it’s moving in the right direction.

Median days on the market for all home types increased this month, indicating that the pace of sale is slowing. That tends to happen around this time of year so it’s hard to know if this is a new trend or a typical holiday slowdown.

And in the final piece of good news for buyers, the average sales price to original list price ratio slightly dipped again this month to 98.9%. This means that on average, for a home listed at $500,000, it would be purchased at a sales price of $494,500. This ratio is still higher than where we were last year, but is a good sign for sidelined buyers who couldn’t compete in last year’s hyper competitive market.

You might be interested to know that in 2023, 70% of homes sold in the first 4 weeks. If a home doesn’t sell in the first 4 weeks, sellers usually implement a price reduction. So if the average sale to original price ratio was about 99% this year, it means the 30% that didn’t sell in the first month, dragged that average down, which also means that plenty of homes sold above the list price this year.

Now for the good news for sellers and challenges for buyers… despite the high interest rates of 2023,  home prices increased about 4.5% year over year nationally and 5% in the DC metro area.

We need more homes for sale to meet buyer demand, but the number of new listings in November didn’t help. There was actually a decrease month over month and year over year, indicating that inventory will remain tight for now.

On trend with the lack of inventory, the number of closed sales in the region decreased as well, with single family homes and condos down around 8% compared to last year. This is largely due to the lack of supply rather than a lack of demand.

But here’s some great news for all current and future homeowners. Real estate remains an incredible investment over time. Since 1991 (which is when the National Association of Realtors started publishing data), home prices have increased an average of 306%. Throughout the country, every region has increased.  We want to help our clients build wealth, and we want to partner with other businesses that help our clients do that as well.

So what does it all mean?

If you are a buyer…

  • The good news is mortgage rates are decreasing, increasing affordability, while inventory is rising, which provides more options for you.
  • Predictions for home values are conflicted, but on average, are expected to be positive in 2024.
  • Our advice is to start looking again if you took time off. Given the lack of supply and a potential decrease in rates, we expect many sidelined buyers to jump back in the market, which will increase competition for homes and cause prices to rise again.
  • No one is getting a “steal” in this market, but keep an eye on the market for a home that’s a great value during this holiday slowdown, as fewer buyers are searching for homes right now. You can turn a good home into a great home through your own updates.
  • If you are thinking of building a home, now may be a good time to start the process since it can take a year or longer.

If you are a seller…

  • Inventory is low and prices are still high. The average sales price to original list price ratio has decreased, but average sales prices have increased. The question is, where do you want to be a few years from now and what’s the plan to get there? The process of moving can seem overwhelming, but we partner with all the services you need to make it smooth and fun. Give us a call and we’ll help you create a plan!

If you are an investor…

  • Rents have been rising in most places in the DC metro area, outside of DC proper, where we have seen some very challenging environments for landlords. We’ve even seen some investors dumping their investments in DC. Be very smart where you are investing right now. As investors ourselves, our team can help advise you on that.

That’s it for this month. We hope you and your loved ones have a wonderful holiday and please reach out to us if you have any real estate needs. We want to take care of you and the people you care about.

Happy Holidays!