What’s Up with Real Estate?
National news and local views for the week ending Friday, February 2, 2024
The Fed kept rates on hold (again). But with "core" PCE inflation approaching their 2% target, rate cuts are not a question of if, but when. If you're looking to make a move this year, be aware that there could be a rush of previously sidelined buyers if mortgage rates drop significantly.
National Real Estate News
Fed holds rates steady
On Wednesday, the Fed kept short-term interest rates steady, and said it was "unlikely" that they would begin cutting rates in March. But with "core" PCE inflation already approaching their 2% target, the risk of damaging the economy through unnecessarily high interest rates is rising. Whether rate cuts start in March or May - they're coming soon...even if the job market remains tight.
But market expects cuts
Remember: the Fed doesn't set mortgage rates, the market does. And the market is always looking ahead, trying to "guess" where inflation and interest rates will go next. Despite Powell's rhetoric, the market expects a series of rate cuts to begin in May at the latest. This, together with somewhat weaker job numbers recently, has caused the average 30-year mortgage rate to drop back to near 6.6%.
Not a 'head fake' this time
Around this time last year, pending home sales skyrocketed in response to a sharp (but ultimately brief) fall in mortgage rates. But the 8% month-over-month jump in pending sales experienced last month is much more likely to be sustainable. Why? Because the Fed will be cutting (instead of raising) rates, and the inventory of homes available for sale is beginning to rise.
Local Market Trends
As of Friday, February 2, 2024
Is the local market shifting?
> Yes, we are seeing a decline in the market in the number of homes sold, dollar volume, number of showings per listing, and pending sales.
> Yes, we're seeing an increase in inventory, days on the market, and new listings.
>> What are we also seeing? A steady and slightly rising median sales price.
What does this mean? It means that it's taking longer to sell homes and with fewer showings, but home prices remain steady. We are not seeing market degradation. The local market is leaning towards a buyer's market, but it's nothing that we've seen before. This is typically when we start seeing price reductions, but that's just not happening right now.
Median Sales Price
Homes for Sale
Days on Market
Shows Per Listing
|Median sales prices have remarkably remained consistent throughout the entire MLS and are still on a slow climb. This is an interesting statistic when it's coupled with a static inventory and longer days on the matrket.
|There's quite a difference in new listing levels across Oklahoma. New listing levels across the MLS have a higher variation than in OKC, Edmond, and Yukon, which has remained relatively level due to real estate being more seasonal outside the metro areas.
|While we're seeing a sharp increase in inventory across the entire MLS, we're seeing relatively level inventory levels in the metro with a slight increase this year.
|While the entire MLS is seeing a steady decline in pending sales, the metro areas are seeing only a slight decline.
|The number of closed sales across the entire MLS is on the decline. Just like the other numbers, the metro area's are seeing a decline, but it's not nearly as drastic.
|Mirroring the numbers of closed sales above, the dollar volume is seeing a similar decline.
|This is where the numbers start to get very interesting. We are seeing a sharp increase across the MLS and metro areas of how long each home stays on the market.
|We're also seeing a decrease across the board of showings per listing.