Over the past two years, the substantial imbalance of low housing supply and high buyer demand pushed home sales and buyer competition to new heights. But this year, things are shifting as supply and demand reach an inflection point.
The graph below helps tell the story of just how different things are today.
This year, buyer demand has eased as higher mortgage rates and mounting economic uncertainty moderated the market. This slowdown in demand is clear when you look at the red bar on the graph. It uses the latest data from ShowingTime to illustrate how showings (an indicator of buyer demand) have softened by just over 12% compared to the same time last year.
Now for a look at how housing supply has changed, turn to the green bar. It uses data from realtor.com to show active listings are up nearly 27% compared to last year. That’s because the moderation of demand allowed housing inventory to increase in 2022.
However, when you drill down into the data for our local housing market, you see a different story. For example, in the chart below, Alexandria City's current Active Listings for September are DOWN 24.9% year-over-year. Fairfax County Active Listings are down 14.4% year-over-year. New pending sales (buyer demand) are down 40.5% year-over-year in September for Alexandria City and down 34.5% for Fairfax County.
The biggest difference between what we are seeing locally and what's happening on a National level is we aren't seeing Active Listings increase in the same manner on a local level.
If we zoom out to a five-year-view we can see Active Listings and New Pendings typically intersect around September/October as the market moves into the Winter cycle of slower sales. New listings are often about a month behind the seasonal decrease in buyer demand.
However, once the next year begins buyer demand typically outpaces active listing growth which generates higher prices in the market since demand is greater than supply.
If you’re thinking of buying a home in the 4th quarter of this year, you’ll have less competition than you would have had last year and increased negotiation power. However, when the new year begins don't be surprised to see competition crank up again, even despite higher interest rates.
If you’re looking to sell your house, know that inventory is still low overall and buyer demand should increase in the Spring. That means, if you are selling now you should price the home reasonably, and factor in your carrying costs to get to the Spring market. That’s because there are still buyers out there who want to move, and your house may be exactly what they’re looking for. However, don't sell at an unacceptable price, if you can wait until 2023 to sell your home.
If you’re thinking of buying or selling a home, the best place to turn to for information on today's supply and demand is a trusted real estate professional. Let’s connect so you know what’s happening in our local market and what that means for you.