Prices Rise, Sales Plummet
Everyone knew the persistent seller’s market and the skyrocketing price of homes couldn’t continue forever, but the reversal of long-lasting trends in the real estate market is startling. We’re reminded of a line from The Sun Always Rises by Ernest Hemingway. Responding to a friend wondering how he went broke, Hemingway’s character replied, “Two ways. Gradually, then suddenly.”
Like the cheating dieter who steps onto the scales after months of sneaking doughnuts, the market is suddenly realizing the gradual effect of escalating prices. Now that we’re seeing the pent-up effects of the years-long seller’s market, it’s apparent the aftermath is going to hang around a long time. The bottom line is that the low interest rates that helped fuel a hot market are a thing of the past. Potential home buyers who are delaying their purchases in the hope interest rates will drop will most likely have a long wait ahead of them. Mortgage rates are already double what they were this time last November. Troubled by rising inflation, the Federal Reserve is seriously discussing even more increases.
Sellers, seeing demand continue to drop, are holding off putting their homes on the market. Many are understandingly concerned about the rising costs of their next mortgage. So both buyer and seller behaviors are contributing to the dramatic plunge in the number of both completed and pending home sales.
Charlotte home sales data for November reflects national trends. The addition of 2,401 homes boosted the total number of homes for sale to 7,326 units, an increase of 48.8%. The latest count of the number of days homes were on the market until closing illustrates even more dramatically how the housing market is cooling. That indicator surged by 61.9% to 34 days, a hike of 13 days compared to this time last year. Once again, home prices have climbed. The latest median sales price of $381,000 reflects an increase of $28,500, or 8.1%, from last November.