As I do at the beginning of each month, I calculated all of the vital real estate market stats for the Augusta real estate market to see how home prices and inventory are tracking for the most recent quarter compared to the quarter ending the previous month. This is a rather unconventional way of tracking market data, but I have found that this information can provide insight into developing trends that year over year stats do not always reveal. This was especially true in September.
In this month’s analysis, the most notable stat is that housing inventory in the Augusta MLS increased 9.7% from 1284 home listings on 9/8/2022 to 1409 listings on 10/4/2022, which is a rather large jump considering we are headed into the traditionally less active real estate season. To find the cause for the jump in inventory, we need to look no further than the number of homes sold during the same period. If the number of homes sold also increased, we know that the increase in inventory is due to more sellers entering the market; however, what I found was that the number of homes sold from July through September DECREASED 9.8% compared to the previously 3 month period from June through August. This indicates to me that the local market is indeed slowing down and homes are sitting on the market significantly longer than just a month ago.
But is this a sign of an overall market slowdown or merely that we are headed into the traditionally/relatively slow winter real estate season? Typically, what we see this time of year is a decrease in housing inventory AND a seasonal dip in the number of homes sold, but the fact inventory is actually higher now than it was during the traditionally busy summer months indicates to me that homes are taking longer to sell and are sitting on the market longer. This is supported by the fact that the currently months supply of homes, or absorption rate, for the Augusta market sits at 1.74 months (see chart below), which is more than double the 0.8 months it was earlier this year.
All that said, the news is not all bad, and honestly, I could argue that this is all good news for the local market. For buyers, it means there are more homes to choose from and more leverage to negotiate with sellers. Many home builders are now offering buyer incentives which can be used to buy down interest rates and dampen the blow of rising rates. Now that there are not as many multiple offer situations, many home sellers are willing to pay the buyer’s closing costs with an acceptable offer, allowing buyers to get a better rate on their mortgage. You may also be able to get the seller to do repairs to the property instead of being forced to pay over list in “as is” condition and pay the appraisal gap if the appraisal comes in low.
There is also good news for sellers. Most homes are still selling fairly quickly and for full list price or more when priced right. The best news for sellers is that home prices in the Augusta market as a whole only dipped 0.21%, or an annualized rate of 0.84%, during the July-September quarter vs. June-August. That’s only about $2,500 on a $300,000 home.
The bottom line is that I think it is safe to say that the market has definitely shifted from a sellers market to a neutral market that is fair to both buyer and seller. It is still a good time to sell a home, especially an investment property, but the days of multiple highest/best offers are behind us for now, so you may have to…(whispering voice) negotiate. For buyers, interest rates are definitely higher than they once were, but they are still not terrible when compared to historical norms. Add in that you may be able to score closing costs from the seller to help soften the blow of high rates, along with the fact that there is more housing inventory to choose from, and the picture is not as gloomy as some would say. At least not yet.