Existing home prices fall 11% from peak. Sales hit lockdown low. Cash buyers and investors hit hard

Priced right, any home will sell. But the sellers are not willing to give the right price for their homes.

By wolf richter for wolf street,

It keeps happening: Sales of previously owned homes, condos and co-ops fell 1.5% in November to December, the 11th month in a row of declines, and 34% year-over-year to a seasonally-adjusted annual rate of 4.02 million home sales, roughly matching the lockdown-low in May 2020, and further the lowest since the depth of the housing bust1 in 2010, According Today for the National Association of Realtors.

Almost any home will sell if the price is right, but sellers don’t want to price their homes right. And potential sellers are sitting on their vacant homes, hoping for a quick end to this recession, or they’re putting it on the rental market or trying to make it as a vacation rental instead of dealing with the reality of one. have been The mind-blowing housing bubble that burst (via historical data) YCharts,

actual sales In December — not the “seasonally adjusted annual rate” of sales — fell 36.3% year-over-year to 326,000 homes (from 513,000 homes a year earlier), according to the NAR.

Average price Home sales of all home types closed in November, falling for the sixth consecutive month to $366,900, down 11.3% from the June high. This decline reduces year-to-date gains to just 2.3% from a year-to-date gain of 16% in the spring of 2022.

Only part of this June-December price decline is seasonal: the average June-December decline in the six years before the pandemic was 5.8%, with a maximum decline of 6.4% and a minimum decline of 3.8%. This suggests that the current 11.3% decline is much higher than the maximum seasonal decline.

Additional confirmation that much of this decline was not seasonal is provided by sharply shrinking year-over-year price gains, to just 2.3%, from 16% in December 2021 to spring 2022 (historical data via YCharts) Has gone:

In some markets, the average price has dropped significantly. For example, in In the San Francisco Bay Area, average prices have fallen 30% from the peak in April 2022, and 10% year-over-year, according to the California Association of Realtors. But other markets are lagging behind to produce the overall national average.

All-cash buyers, investors and second home buyers make a comeback in a big way, All-cash sales fell 22% year-over-year to 92,000 homes (28% of 328,000 homes sold), down from 118,000 in December 2021 (23% of 513,000 homes sold). In other words, buyers who paid cash didn’t want to buy these overpriced homes, even though they didn’t have to worry about getting high-rate mortgages.

Sales to individual investors or second home buyers fell 27% to 52,500 homes (16% of 328,000 homes) in December 2021 from 71,800 (14% of 513,000 homes sold). They also withdrew from this market.

sales of single family homes New homes fell at a seasonally-adjusted annual rate of 3.64 million homes, falling 1.1% in November and 33.5% year-on-year in December.

Sales of condos and co-ops Shipments fell 4.5% in November to December and 38.2% year-on-year to a seasonally adjusted annual rate of 420,000 units.

Sales fell in all regions, but sank most in the west. Percentage change year-over-year (NAR map of regions):

active listing 68,900 in December (active listings = total inventory minus properties for sale with pending sales), a 55% jump from a year earlier. Right before the holidays, many sellers take their homes off the market, and then put them back on the market for the spring selling season. This happens every year; Active listings begin to drop before Thanksgiving and don’t rise again until spring (data via realtor.com,

Active listings, although much higher than a year ago, are still relatively low because potential sellers are determined to wait for a brief lull in the market, and in the meantime they are putting their vacant homes on the rental market and They are trying to bring in some cash by putting their vacant home out as a vacation rental. And many people are just sitting on their vacant homes that they didn’t sell because they wanted to top the market with huge gains of 20% or 30% in a year. But that show is over. and now what?

average day on the marketThat increased to 67 days before the distressed seller takes the home off the market, or before the home is sold (Data via realtor.com,

Price cut: Active listings with price reductions reached a new high for any given December in data from Realtor.com as far back as 2016: 25% of active listings in December 2022 had a price reduction, for example in pre-pandemic December 2019 17% to .

December or January is usually the seasonal low point for price cuts. Rather than cut prices, many sellers take their homes off the market and wait for the spring selling season before re-listing them. That sellers are cutting prices to such an extent during the holidays shows that they are getting a bit more aggressive.

Expecting a quick reversal of this recession: This combination of declining sales, declining prices, increasing active listings, increasing days on the market before a home is pulled or sold, increasing active listings with reduced prices, but still tight supply indicates that many potential sellers are still are also expecting a quick reversal of this downturn. And they’re letting the vacant home wait out better days, or they’re putting it on the rental market or trying to use it as a vacation rental instead of dealing with the reality of a luxurious dwelling. A bubble that has burst.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it very much. Click on the Beer & Iced-Tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? register here,

Source link

Leave a Comment