While I have many people asking me if prices are falling and wondering if they can get in on the Kohl’s 40% off sale, prices in Summit are still holding steady. Year to date sales volume is down 16% from last year and number of transactions is down 35%. That means that we are seeing less closings (by 35%) but only seeing a decrease in sales volume by 16%, thus pricing remains strong.
Here is the full Summit County Market Report from Land Title.
What we are seeing in the last two months are days on the market increasing and sale to list ratio falling below 100% to an average of 96-97%. New under contracts (i.e. pendings) remain strong so we will not see a huge drop off in closings, but are getting back to pre-pandemic numbers. We are also seeing a lot of price reductions! So why aren’t prices falling from the sky? What I think is that this spring prices “surged” and price reductions are bringing prices back in alignment with market conditions.
Here is my crystal ball: We spent the last two years with a buying frenzy where low interest rates and a high “wealth factor” kept people in the buying game. It was commonplace for a property to be on the market for hours and have multiple offers. With the Fed cooling the economy with increasing interest rates and with our local governments regulating short term rentals, the market had to slow down. We are a few months into this new equilibrium and things have not come to a grinding halt. We are still seeing transactions, albeit less than the last 2 years. I predict that there will be downward pricing pressure as inventory slowly builds, especially on properties in unincorporated Summit County which won’t have certainty on STR regulations until February 2023 (hopefully). Just how much, is the question. My guess is that we will experience about a 10% price correction by the end of next summer if all things remain the same. So, no – not 40% off, but maybe 10% off.
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For primary home markets, and for people with primary residences in Summit, I predict that more sellers will stay in their homes unless they absolutely have to move – job relocation, school, etc. Millions of Americans are locked into 30 year fixed mortgage rates at below 3%. The prospect of moving increases their costs, without getting more home. In fact, to stay at the same monthly payment, a seller would have to get a loan at $175,000 less.
$500,000 loan at 3.0% = $2,108
$500,000 loan at 7.0% = $3,326
$325,000 loan at 7.0% = $2,162
If you are looking to buy and obtain a loan, consider an ARM product and then you can refinance in a few years when rates stabilize. You can also buy down the interest rate. If you are looking for more information on loan products, let me introduce you to my preferred lenders.