Priced right, any home will sell. But sellers are not willing to give the right price for their homes.
By wolf richter for wolf street,
It keeps happening: Sales of pre-owned homes, condos and co-ops fell 1.5% in November to December, the 11th month in a row of declines, and 34% year-over-year to a seasonally adjusted annual rate of 4.02 million home sales, roughly matching the lockdown-low in May 2020, and further the lowest since the depth of the housing bust1 in 2010, According Today for the National Association of Realtors.
Almost any home will sell if the price is right, but sellers don’t want to price their homes right. And potential sellers are sitting on their vacant homes, hoping for a quick end to this recession, or they’re putting it on the rental market or trying to make it as a vacation rental instead of dealing with the reality of one. have been The mind-blowing housing bubble that burst (via historical data) YCharts,
actual sales In December — not the “seasonally adjusted annual rate” of sales — fell 36.3% year-over-year to 326,000 homes (from 513,000 homes a year earlier), according to the NAR.
Average price Home sales of all home types closed in November, falling for the sixth consecutive month to $366,900, down 11.3% from the June high. The decline reduced year-to-date gains to just 2.3%, from year-to-date gains of 16% in the spring of 2022.
Only part of this June-December price decline is seasonal: the average June-December decline in the six years before the pandemic was 5.8%, with a maximum decline of 6.4% and a minimum of 3.8%. This shows that the current 11.3% decline is well ahead of the maximum seasonal decline.
Additional confirmation that much of this decline was not seasonal is provided by sharply shrinking year-over-year price gains, to just 2.3%, from 16% in December 2021 to spring 2022 (historical data via YCharts) Has gone:
In some markets, the average price has dropped significantly. For example, in In the San Francisco Bay Area, average prices have fallen 30% from the peak in April 2022, and 10% year-over-year, according to the California Association of Realtors. But other markets are lagging behind to produce the overall national average.
All-cash buyers, investors and second home buyers make a comeback in a big way, All-cash sales fell 22% year-over-year to 92,000 homes (28% of 328,000 homes sold), down from 118,000 in December 2021 (23% of 513,000 homes sold). In other words, buyers who paid cash didn’t want to buy these exorbitantly priced homes, even though they weren’t concerned about getting a higher rate mortgage.
Sales to individual investors or second home buyers fell 27% to 52,500 homes (16% of 328,000 homes) in December 2021 from 71,800 (14% of 513,000 homes sold). They also withdrew from this market.
sales of single family homes Homes fell at a seasonally-adjusted annual rate of 3.64 million homes in November to December, down 1.1% and 33.5% year-on-year.
Sales of condos and co-ops Shipments fell 4.5% in November to December and 38.2% year-on-year to a seasonally adjusted annual rate of 420,000 units.
Sales fell in all regionsBut the biggest decline has come in the west. Percentage change year-over-year (NAR map of regions):
active listing 68,900 in December (active listings = total inventory minus properties for sale with pending sales), a 55% jump from a year earlier. Right before the holidays, many sellers take their homes off the market, and then put them back on the market for the spring selling season. This happens every year; Active listings begin to drop before Thanksgiving and don’t rise again until spring (data via realtor.com,
Active listings, although much higher than a year ago, are still relatively low because potential sellers are determined to wait for a brief lull in the market, and in the meantime they are putting their vacant homes on the rental market and They are trying to bring in some cash by putting their vacant home out as a vacation rental. And many people are just sitting on their vacant homes that they didn’t sell because they wanted to top the market with huge gains of 20% or 30% in a year. But that show is over. and now what?
average day on the marketThat increased to 67 days before the frustrated seller took the home off the market, or before the home sold (Data via realtor.com,
Price cut: Realtor.com’s 2016 data showed active listings with price reductions reached a new high for any given December: 25% of active listings saw a price reduction in December 2022, for example in pre-pandemic December 2019 above 17%.
December or January is usually the seasonal low point for price cuts. Rather than cut prices, many sellers take their homes off the market and wait for the spring selling season before re-listing them. That sellers are cutting prices to such an extent during the holidays shows that they are getting a bit more aggressive.
Expecting a quick reversal of this recession: Falling sales, declining prices, increasing active listings, increasing days on the market before a home is pulled or sold, increasing active listings with reduced prices but still tight supply indicates that many potential sellers Still hoping for a quick reversal of this downtrend. And they’re letting the vacant home wait out better days, or they’re putting it on the rental market or trying to use it as a vacation rental instead of dealing with the reality of luxurious housing. A bubble that has burst.
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