2023 Housing Thoughts
So Looking at the local (Escambia County Florida) numbers from 2023 what can we learn? The total inventory remains low--which should translate into housing prices staying strong. Though some indicators are pointing to more houses coming on the market, which may not reduce the price, but should push the number of days a house could stay on the market out considerably. Looking at the numbers, the absorption of inventory (detached residential homes in Escambia County) stayed pretty consistent. In other words, the amount of homes on the market throughout 2023 supplied enough inventory for 3 to 5 months of sales. That was tempered by the higher interest rates--discouraging both buyers and sellers. On the buyer's side, it caused some buyers to forego purchasing altogether because it pushed their house payments out of reach for their income. Other buyers simply pushed back their plans to purchase to a later date "hoping" prices or interest rates would drop, so they could move forward on their home ownership/upgrading dreams. On the seller's side, it caused a segment of potential sellers who may have put their home on the market (adding the needed inventory) to hesitate, in order to preserve their current interest rate--thus keeping their payments low. This segment of potential sellers typically has a very low rate, and most likely purchased when the home prices were considerably less expensive.
High interest rates tied with higher home prices looks to have caused a continued lack of inventory in 2023. This lack of inventory looks to be holding home prices strong. Looking into 2024 (an election year) it is looking likely that interest rates will moderate--and maybe even fall.
Historically, more homes will naturally come onto the market in the first quarter, which will begin to help relieve the pent-up demand for homes that the market is calling for. This should bring supply and demand back to a number that is more acceptable to both buyers and sellers. In saying this, I don't believe it will cause home prices to have a dramatic drop. Circling back to my earlier thoughts having more inventory to choose from will most likely stretch out the time seller's homes are on the market, and cause the sellers to be more amiable to accepting buyer concessions.
Bottom Line
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