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Closings in July indicate continued downward pressure on home pricing. However, both active inventory increases and price decreases have slowed, indicating we are approaching a turn. We continue to model the correction based on the 2018 market, which suggests the median closed sales price bottoming out in two months (September 2022 closed sales) at $1,300,000 or higher.
— Median closed sales price dropped for the third consecutive month, although at a slower pace than the previous two months. (Prices are up 6.72% from a year ago)
— Active inventory continues to grow at a slower pace than in the previous two months.
— Interest rates have decreased from their peak of 5.81% the week ending June 23rd to 4.99% the week ending August 4th.
LOOKING FORWARD: It is possible that 2023 will begin like most calendar years with low supply, high demand, and lots of multiple offers. Although, it is anticipated the amount above list price will be less than we experienced in 2020, 2021, and 2022. Why does this seem possible?
— The current market conditions were caused by rapid price appreciation and interest increases.
— Active inventory has grown by 847 houses from 350 on 7/31/21 to 1,197 on 7/31/22. The inventory growth has switched the market dynamics from buyers competing with other buyers in multiple offers to sellers competing with other sellers.
— The extra inventory was created by the 1,160 fewer closed sales year to date in 2022 (3,603 YTD) vs. 2021 (4,763 YTD). Those buyers did not go away, they are waiting. Once affordability (Purchase price and interest rates) reaches a level to attract buyers back to the market, those buyers will buy, and the active inventory will decrease, and the market dynamics will switch back to buyers competing with buyers.