December 2022 Housing Market Update

With the CPI news on Tuesday, the Fed rate announcement Wednesday, and our local housing data announced, it’s going to be a jam-packed update and you’ll want to hear about a few of Zillow’s bold predictions for the 2023 housing market. Check out the full video on our YouTube channel!

So, what in the world is CPI anyway? 

CPI stands for Consumer Price Index. The U.S. Bureau of Labor Statistics defines it as “a measure of the average change over time in  the prices paid by urban consumers for a market basket of consumer goods and services.” Per BLS.gov, this includes consumer expenditures like food and beverage, housing, apparel, transportation, medical care, recreation, education and communications, and other goods and services.

Obviously, the small increase in the CPI month over month was celebrated in the markets because it may be an indicator that we are starting to turn the corner on this nasty inflation that’s impacting everyone on a daily basis.     

And that leads me to the Fed announcement Wednesday:  The Fed announced, as expected, a 50 base points rate hike on Wednesday.  It was not a shocker, but his commentary was what everyone paid attention to.  The mortgage interest rates had already had this most recent rate hike built-in to their rate sheets so there wasn’t this big mortgage interest rate hike.  

With the CPI data for December and the lower fed rate hike, mortgage interest rates seem on a very slow decline. We’ll have to see if this holds and more importantly if the January CPI shows the fed’s actions are indeed getting inflation under control. 

Here’s a quote from Freddiemac on December 15th:

“Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s Chief Economist. “The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand. The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.”

The big question is how is this affecting our local housing market.  

We are going to look at 3 stats this week to understand the dynamics of this late 2022 housing market. Ready to get your 2023 real estate goals set?  Book a call.

1. Prices

2. Percentage of sales with a seller concession

3. Inventory

STAT #1: PRICES

The median sold price of single-family-homes decreased by 1.4% from October 2022 with a median sold price of $850K.

So what made the sold prices decrease from last month? Sellers are having to factor in the higher interest rates into their asking price and by doing this, they were selling at 98.7% of the asking price. When I report about December stats in January, I’m very interested to see how the modest lowering of interest rates may have encouraged buyers even during the holiday season. 

2: Seller credits 

Our team did some research and discovered 24% of sellers provided a closing cost credit with an average credit to the buyer of $11,338.

A seller closing cost credit can be used by the purchaser to offset the closing costs, prepaid items, or discount points to buy down their rate.  There are limits so reach out to our team so we can share with you what the max seller contributions for each loan type are and make sure to talk with a reputable lender to use the seller credit wisely.  

We’ll definitely keep an eye on the percentage of price reductions to see if this trend continues through the holidays.

STAT 3: INVENTORY

The inventory of homes decreased from October to November by almost 17%. 

What’s happening here? 

I said this last month, but this is to be expected this time of year. However, the  Spring season is just around the corner, so life changes with jobs, parents making moves due to school choices for their kiddos, or just right-sizing locally or around the nation are still going to take place this upcoming Spring. Our team starts experiencing the Spring market at just about the same time as Super Bowl weekend. 

However, I’ve been saying this all year long and it’s worth repeating. So many homeowners have refinanced their current home in the past 3 years with historically low-interest rates, so it’s going to be hard to consider selling their property if their mortgage is low.  

Ready for Zillow's predictions?  Check out the video starting at 4:04 to hear all about it!

Until next time! 

 *Data from Bright MLS, Freddie Mac, Zillow, and BLS.gov

 Photo by Spacejoy on Unsplash