Residential real estate has a new attitude, and it looks and feels much different than it did six months ago. Rising interest rates, volatile stock prices and consumer confidence are playing a role in making things feel a bit less frenzied.
The September numbers have been published by the Kansas City Regional Association of Realtors, and while the news is not all bad, trends are shifting. Is it the end of the world? NO! Can you still buy and sell houses? YES! As I have stated in previous articles, shifting to a more normalized market can be a good thing. It allows for more balance in pricing and negotiations. When every house is selling with no inspections and waived appraisals, a level of energetic frustration permeates the entire transaction.
Let’s review the numbers for September, as well as year-to-date. To begin, the number of closed transactions in the month of September decreased by 18.5% from the same month in 2021, which is a significant change. As for year-to-date numbers, we have seen a 7% decrease in closed business. Houses under contract dropped 20% for September and 10.4% year-to-date. This gives you the most accurate, real-time account of the current status of the market. Closed sales could have been under contract for 30 days, or even 90 days. Pending sales are defined as under contract transactions pending inspections, financing, and any other potential contingencies.
Interestingly, the average sales price jumped up 8.7% for September and 11.1% year-to-date. The average sales price in the Kansas City metro area is now $336,900, which is up from $303,150 this time last year. For perspective, the average home price in September of 2019 was $249,721. The last few years has been quite the ride. Average days on market has moved from 20 days to 24 days, which indicates that homes are taking longer to go under contract, likely due to buyers leaving the marketplace. Lastly, the supply number has increased from 1.4 months to 1.6 months, which is a 14.3% increase in the month of September, year over year. Remember that a balanced market is considered 6 months of inventory. We have plenty of runway before we are in a balanced market. The lack of homes is exacerbated by the interest rates being significantly higher than when most people locked in rates for their current housing situation.
What does all this mean to you, the client? The market is softer than it has been, yet pricing continues to climb due to a lack of inventory. It is still a great time to buy or sell a home. At the time of publication, interest rates were around 7.2% for a 30 year and 5.4% for a five-year ARM. Please check with your lender for the most up-to-date rates. Most buyers are leaning towards the ARM option until interest rates come back down. The conventional wisdom of our lending partners is rates will be back to a familiar range at the end of the 3rd quarter 2023. Regardless of interest rates, now is the time to use a true professional for the purchasing and selling of your home. If you have the right agent, the right strategy and a little bit of patience finding or selling a home can become a reality. I happen to know a few good real estate professionals if you are interested in having a conversation.
Bash & Co. Sotheby’s International Realty is an innovative full-service residential real estate brokerage that leverages the latest technology to serve clients in emerging, established, and luxury neighborhoods across the Kansas City area. Follow them on Instagram here and on Facebook here.
