There has been a lot, and I mean A LOT, of talk on the national and local stage about the housing market shifting or possibly even being on the verge of a crash, but the latest real estate stats for the Augusta metropolitan area housing market for the second quarter of 2022 simply do not support such a theory.
Most real estate stats you see on the news compare, for example, June of this year to June of last year, but I don’t think those stats tell the whole story. To give myself an idea of what the market may hold in store looking forward, I like to take a microscale look at what the market has done in the past 3 months compared with the 3 months prior. I realize this can be a flawed approach, since the market has seasonal ebbs and flows, but when it comes to certain vital stats like average home price and months supply of inventory, those seasonal fluctuations are less significant. Just because June 2022 prices are up compared to June of 2021 does not necessarily indicate that prices are headed up; however, if June 2022 prices were to be lower than March 2022 prices, it would make me raise an eyebrow and wonder if some kind of change may be imminent.
As you can see in the chart above, the average price of a home in the Augusta metropolitan area (CSRA) continued to rise sharply in the second quarter (April 2022-June 2022) when compared to the first quarter of 2022 (January 2022-March 2022). Taking stats out of the picture and applying my real world experience on the ground selling homes, I have noticed homes seem to be staying on the market a little longer with more price reductions, and fewer multiple offer situations; however, these observations are not impacting market statistics YET.
As you can see in the chart below, housing inventory as of July 1 stood at 1.34 months, which is up about 2 weeks or so from last quarter. In theory, this could explain my perceived reduction in multiple offer situations, but as you can see in the pricing stats, that has not translated into any kind of slow down in prices with the entire CSRA increasing 6.78 percent between April and June. That’s an annual rate of 27.13 percent!
At a personal level, I have noticed lately that it seems like my listings are staying on the market a little bit longer than they were, say, this time last year, and that is reflected by the average days on market for homes in our area increasing to over a month for the first time in a while. Keep in mind that number includes the pending sale period, which is typically around 30 days, so homes are still going under contract very, very fast; just not as fast as they were a month or two ago. Sellers are also still getting more than list prices on average.
So what lies ahead you may be wondering? It’s anyone’s guess, but I can’t imagine Augusta home prices going up another 27.13 percent by this time next year, as the stats above would imply, so that means something has to give. But what? Will rising interest rates (now double what they were earlier this year) be enough to drive demand for homes down and put pressure on prices? We are not seeing that yet. Will those same rising rates also make current homeowners reluctant to upgrade or downsize, because they do not want to give up the 2.5 percent rate they pay on their current home for a much worse rate on their next home? Or perhaps, the answer lies in the record inflation we are experiencing. Will that drive potential homebuyers into more debt, damaging their credit, and reducing the number of able home buyers?
I am no economist, and this is just an opinion piece, but I think the real answer lies in the unemployment rate here locally in the Augusta area. As long as companies are able to absorb inflation and avoid laying people off, I think the Augusta market will be just fine. I think a slight cooling of the market would actually be a good thing. As housing inventory continues to improve/increase, the real estate market could soon once again be a pleasant place for both buyers and sellers, although I think we will ALL miss those 2.5 percent rates from just a few months ago.