July Market Update
Interest rates have gone up – there’s lots of warnings about a market slowdown. June numbers in this area did not reflect a slowdown but you wouldn’t expect it to given that interest rates went up in June and settlements in June reflect contracts written in May. July numbers represent contracts written in June so it’s still a bit early, but there’s some evidence that things are slowing down. Not crashing – just to be clear.
So there’s several indicators that paint a picture of what’s going on in the housing market. The main one that shows if there’s a shift away from a seller’s market is the months of inventory. That number compares the number of active listings to the number of sold or pending listings within a specified period. If you divide active listings by sold listings, that will give the number of months it would take for all the homes on the market to sell if no new listings appear. If the number of months is between zero and 4, that’s considered a sellers’ market. So sellers have the advantage. That’s where we’ve been for a while now. If it’s between 5 and 7, that’s considered a balanced market so there’s an equal number of homes to sell and buyers to buy them. 8 or above is a buyers market so buyers would have the advantage in that case. So we’ll take a look at months of inventory for July and the months leading up to July for all 3 counties. We’ll also look at some other market statistics – number of mortgage applications which indicates how many buyers are looking for a home and number of sales. All that should give us a picture of what’s going on. But it will take a few months to confirm that there really is trend or a market shift.
So first indicator – months of inventory. For Berkeley County in July that number is 4. 4 months to sell all the homes listed if no other homes come on the market. So that’s gone up from the months of inventory since March where it was hovering around 3. 4 is Still considered a seller’s market but that’s edging up to a balanced market. If that keeps edging up, then we’ll know we are shifting from a seller’s market. Jefferson County months of inventory. Just under 5 which is also up from previous months. 5 is considered a balanced market. Morgan County is just under 6 months of inventory – a balanced market and also up from previous months. So all 3 counties show a increase in months of inventory. If August and September show an increase, then we can surmise that the market is shifting to a balanced market. And that’s not necessarily a bad thing. The astronomical rise in prices is just not sustainable.
MONTHS OF INVENTORY
Berkeley County 4
Sellers Market
Jefferson County 5
Balanced Market
Morgan County 6
Balanced Market
Next indicator. Number of sales. How many homes were sold in July compared to prior months. For Berkeley County that number is 222 which is lower than the prior 4 months. From March to June around 300 homes were sold each month so about 100 fewer sales in July. Same thing for Jefferson County and Morgan County. Jefferson went from 145 sales in June to 91 in July. In Morgan, there’s been a steady drop in number of sales since April. There were 37 home sales in July compared to 52 in June. So all 3 counties saw a drop in number of sales.
Number of loan applications. Since most people get a mortgage loan to buy a house, the rise or fall of mortgage applications is a way to see if the number of buyers is growing or declining. When interest rates go up, you’d expect applications to drop and that has happened in July.
I got this chart from the Mortgage Bankers Association and it covers the entire US so it doesn’t address local numbers but what happens nationally is pretty much reflected in what’s going on here. It indicates a drop in applications – down 1.8% for July.
So bottom line, July numbers show a slowdown of market activity in all 3 counties from the previous 4 months – months of inventory went up slightly, number of sales went down as did mortgage applications. So all that says slower market. But there’s not a huge change at this point .And there’s no change in home prices – that’s holding steady. We’ll see what happens in August – that will give us a better idea if there’s a trend down. And just fyi a slow down means less market activity. Which doesn’t necessarily mean a price drop. Prices are dependent on supply vs demand regardless if there’s a lot of activity or not.
