Last month we were fresh off the Summit County Commissioners sweeping decision to stop issuing short term rental licenses for about 10,000 properties which equates to about ⅓ of our total properties. This has caused uncertainty and pause. But in jurisdictions that still allow short term rental licenses, we are also seeing longer days on the market and price reductions. We can then theorize that it isn’t only the lack of STR licenses that are changing the market, but also other factors such as interest rates, the stock market, inflation, etc.

With increased days on the market, increased inventory, and a lot of price reductions, this is the first time in the last 2 years where buyers have more opportunity to purchase! There is a bit more time, and buyers with loans are able to compete, whereas previously, there was usually a cash offer in the bidding war making financed offers less desirable to sellers. If you are a buyer and have been waiting in the wings, there are some good opportunities now, and we can discuss your individual needs so you know the advantages you have right now.

Here are the numbers showing a slow down in demand and increase in inventory.

In the last month comparing May 2022 to June 2022:

We put together a more detailed chart of inventory numbers and pending sales. Overall, from May to June there is 33% more inventory and 27% less pending sales. Expect inventory to continue to increase. You can see how one month makes a difference. We are seeing 33% more properties on the market and 27% less properties going under contract. Inventory will continue to build. I will also report July numbers in August, which will be telling – is this a short term fluke or the beginning of a very different market? 

Summit County Stats May-June 2022.xlsx - Sheet1

Here is Land Title’s May report: Download Here.

Land Title Statistics

Market Snapshot for YTD 2022 vs 2021:

Average Indicators for $: Single Family +30%, Multi- Family +21% and Vacant Land +26%. Median Indicators for $: Single Family +39%, Multi- Family +11% and Vacant Land +30%.

Pricing year over year has increased dramatically. The current market shift will change these numbers in the next 6-12 months.

Market Analysis % Change YTD May 2022:

Monetary volume in May 2022 was down 12% from May 2021. Transactions were down 38% from May 2021. YTD 2022, dollar volume is pacing 4% down from YTD 2021, and transactions are 33% down from YTD 2021.

We are just starting to see signs of less transactions closing.

And let’s put interest rates in perspective:

  • We may have seen the worst of the increases in the 10-year treasury already – we’re back to pre-COVID levels.
  • Mortgage rates spreads are higher than typical now. Usually, you take the 10 year and add 1.7% “spread” to get the 30-year mortgage rate. The “spread” is higher than that now. Historically, that spread should reduce over time to its normal 1.7% range, and that will bring down mortgage rates.
  • Historically, rates go up before a recession and then they go down in a recession.
  • Buyers, go ahead, and buy. Get a 3/1 or a 5/1 ARM. An ARM is cheaper than a fixed rate. Sometime in the next year or two, we’ll have a recession and rates will drop. Refinance to a lower rate.
  • Rates now are where they were in 2019, and a lot of homes sold then.
  • We also have lenders who offer lower interest rates with buy down programs. Depending on the deal, we can ask for seller concessions to go toward a lower rate.

Thanks for Lon Welsh of Ironton Capital and Your Castle Real Estate for the analysis!

Check out this document to learn more about how you can plan and benefit from higher interest rates.

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