Comparing January of 2023 to January of 2022
We know that interest rates have risen, and inflation is still high. According to Kiplinger, there has been a decline in inflation in the past six months, but they predict that the Federal Reserve will not lower interest rates in 2023. What does that mean for real estate? How was the January market in Chittenden and Franklin counties compared to January of last year? And what are we predicting going forward?
Last year in January, looking at single family and condos together, there were 67 listed properties and 109 sold. This year, there were 74 listed and only 88 sold, a decrease of 24% in sold properties. The average sales price was down in 2022 from $530,309 to $506,877 for a decrease of 4.6%. However, the median price was up from $390,000 in 2022 to $437,500 in 2023 for an increase of 12%. This is backwards from what we usually see because the average will take into consideration expensive outliers. I do feel we should consider the median price but consider it cautiously as one month of data is not to be relied upon, just used anecdotally for now.
Median days on market in Chittenden County were nearly the same, 5 in 2022 and 7 in 2023. The percentage over the final asking price that sellers received was 100.8% in 2022 and 100.78% in 2023, almost exactly the same. However, new construction can sometimes skew these statistics because many buyers add to the base price, sending the final price well over asking. I looked at that, too. Taking out new construction, the median price was $420,000, not a huge difference.
Why were so fewer homes listed and sold? We can speculate – people who might want to sell would be leaving a low, often under 3% loan, to buy in the high 6%. Consider the seller who had a $400,000 loan at 3% compared to 6.7% they might have to pay in today’s rates. They would be paying $895 more per month, not counting taxes and insurance. What if they upped their loan on the new house to $480,000 because the home they wanted was more expensive? At the higher rate, they’d pay $2,414 more than they did with their old loan at 3%. We think this is a reason why there are fewer sales.
In Franklin County, the story is similar in some ways and different in others. In 2022 there were 24 new listings and 37 sold compared to 28 listed and 27 sold in 2023. Not a huge difference. Of significance was the change in both average and median sales prices and the time it took for homes to sell. The average sales price in 2022 was $337,453 compared to $308,403 in 2023 for a decrease of 9.4%. The median price fell from $330,000 to $286,000 for a decrease of 15%.
The percentage over asking was nearly the same in Franklin County with sellers receiving 100.51% of their asking price in 2022 compared to 100.35% in 2023. A negligible difference but still over asking.
Given that there is a decrease in both prices, one might conclude that Franklin County has experienced a shift in the market. However, we need to be cautious about generalizing based on one month of statistics.
More than ever, sellers need to price homes based on sales in the past six months, not the past 12 months. We also look at active competition and pending sales but especially reflect on past sales (appraisers always rely heavily on past sales.) In the past, we could suggest that sellers price their homes for a sharply rising market. Now, we are suggesting a more conservative approach for pricing, anticipating that for some homes and for some towns, prices could drop. For both Chittenden and Franklin counties, the first quarter statistics comparing 2022 to 2023 will hold significant interest.
