Here is what’s going on in our local and national housing markets.
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The National Association of Realtors sees the surge in home prices that we’ve experienced over the last year as an anomaly that was driven by pent-up demand due to the pandemic and low interest rates. Now that things are starting to settle down again, we’re seeing last year’s trends ease as well. NAR chief economist Lawrence Yun said, “The housing sector is clearly settling down. Home sales are trying to return to a normal equilibrium after that big surge we saw last year.”
Yun further explained, “Sales slipped a bit in August as prices rose nationwide. Potential buyers are out and about searching but much more measured about their financial limits and simply waiting for more inventory.” Newly constructed home sales are up 1.5% from August while existing home sales dropped by 2%. Both figures are still higher than their pre-pandemic counterparts.
The median price of a home nationally now sits right at $375,000. That’s an astounding appreciation of 15% from last year. The average days on market is 17 days. These quick sales are also due to the continued lack of inventory. A healthy market should have six months of inventory, but right now we have 2.6 months. That’s down 1.5% from July and 13.4% from this time last year.
Here in Dane County over the last 30 days, we’ve had a 16-day turnaround from when a home goes active on the market to when it goes under contract. The median price of $350,000 has remained pretty constant over the last few months.
Economists are hopeful that we’ll see more inventory reach the market soon.
BCA Research puts it like this:
“While we expect growth momentum to ease, temporary forces due to the Delta variant accentuated the moderation in activity between August and September. The reports note that health concerns are weighing on the service sector. Similarly, labor supply and material shortages are restraining manufacturing output and pushing up the backlog of work. Meanwhile, supply chain disruptions and rising transportation costs are raising price pressures. Higher input costs are being transferred to clients in the form of an increase in output prices.”
All of these factors are coming together to hurt affordability. Despite the market starting to cool off, the percentage of buyers who were buying for the first time dropped to 29%, a low we haven’t seen since January of 2019. However, economists are hopeful that we’ll see more inventory reach the market soon. The chief economist at Keller Williams, Ruben Gonzalez, said, “Overall, we think home sales will remain strong going into next year, but we should see inventory levels continue to slowly trend toward more normal levels and home price appreciation begin to slow over time.”
If you’re thinking about selling your home, you haven’t missed your chance. This is still a seller’s market, and you can net a great profit from your house.
If you’d like something a little more concrete flavored by local data and trends, or if you have any questions, feel free to reach out to me directly at (608) 212-5743.