|
New Year, New Prospects
While I think back on 2023, my first thoughts are about the drops in volume and sales we experienced. Yet I also think about how resilient you all are and how you battled through yet another challenging year in the market. For the last few years, prices were increasing at such a rapid pace that even with a decreasing number of units, the volume in the market was still growing. In 2022, there were over 5 million homes sold nationally. While the national numbers for 2023 are not finalized yet, NAR is forecasting that 2023 will see around 4.1 million homes sold, which is a great improvement from November 2023’s 3.8 million at a seasonally adjusted rate.
We all have felt the shift in the market, and in previous updates, I’ve talked about the reasons why: the FED’s involvement in raising rates rapidly, sellers deciding to stay put with their sub-3% mortgages, buyers wondering how to navigate the market, and all the related expectations.
We can all breathe easier today as it’s a new year, a new outlook. There are many reports that the FED will be reducing rates in 2024, maybe three times. Wall Street has been heard saying that with five reductions in 2024, regardless of the amount of the reductions, new lower rates will bring buyers off the sidelines and might bring more sellers who were waiting for the right opportunity back into the market. Pricing is forecasted to continue appreciating modestly in 2024, which just proves what a great investment home ownership has always been.
What Do the Numbers Say?
Looking at 2023 as a whole, we see that compared to 2022, the number of single-family home sales dropped by almost 21% in Massachusetts. That is certainly not a small decrease, but it seems to be right in line with the national numbers. Median sales price rose 4.35%, but we also see average Days to Offer (DTO) increased to 23, compared to 19 in 2022. This shows that competition may have slowed in some markets (and I do know that might not be the case in all markets). The more balanced market is healthy for both sides of the transaction and gives opportunity to good, qualified buyers to make good decisions. If rates do drop again early in 2024, this will certainly be the metric to watch as the pent-up energy in the market could be released again, with more consumers jumping off the sidelines. This is also reflected in sale-to-list price ratio numbers, where we can see that the sale-to-list price ratio for single-family homes in 2023 was at 101.09, in 2022 it was at 102.12, and in 2021 it was at the peak of the frenzy at 102.91.
| 
