Home Sale Prices Fall Short Of Seller’s Expectations: End Of Year Market Report for 2018
After November’s end of month home sale price ironically reached $599,999, we wondered if they would top $600,000 at the end of the year. But it was not to be.
The final month of 2018 saw the first price decline in four months. The average home sale price for December fell to $588,613. Real estate fever might be alive in the minds of many New Yorkers, but those in less hot neighborhoods may have a bitter pill to swallow.
It’s certainly not stalled either, as prices did still increase during the last quarter. But the activity has begun to settle. The steady climb of home sale prices in 2018 tapered off considerably from the wild 2016-2017 ride. For each of these years, prices increased about 11% over the previous year. For 2018, sale prices increased only 7% over 2017.
The biggest takeaways, though, are usually not the most obvious. Home sellers pay the most attention to the average sale price, but we have some indicators that reveal even more about the housing market.
The first and most glaring is list-to-sell ratio. At 96.4%, the ratio of a home’s sale price to its listing price fell to its lowest point in more than two years. It has been declining slowly over the last few years, where it was nearly a full point higher in December 2017 at 97.2%. The takeaway? Falling list-to-sell ratios mean that homeowners are becoming out of touch with their home’s value. Homes are being priced too high because sellers believe that prices keep going up higher than they actually do. There are some hot neighborhoods pushing these average prices up, but you cannot judge every property by this!
However, not all sellers are so naive. The other telling sign we can see is how much active listings have dropped. Inventory is still higher than last year at 1,831 homes (vs. 1,503 in 2017), but down below 2,000 for the first time in eight months. Homes listed in December numbered just 264, compared to 288 in 2017. December is often the slowest month for new listings, and this number is also the lowest in more than two years.
To make the sale, homeowners are slashing prices and homes sit on the market longer. Days on the market were up to 81 from 75 last December. And expired listings are way, way up. During the New Year in 2018, our records show 85 expired listings for the weekend. This year, we saw more than double that at 175.
Shaky Stock Market, Slowing Real Estate
The year of 2018 proved very trying for US stockholders, as prices rose and fell all over the map. After the major dip back in February, the Dow Jones was able to climb to a new high in October of nearly 26,900 points. As of press time, it has since fallen about 15%.
Interest rates have fallen as well, the bank’s sign of weakening confidence in the real estate market’s health. The new year saw the lowest mortgage rates averaged 4.5%. This the lowest rate in more than four months.
Our financial markets and real estate economy are closely tied. When investors begin to feel unease in the stock market, you can bet that weakening confidence in housing markets will follow. The good news is that New York Metro area will likely experience more stability than we see in cities nationwide, which have been going through a sales slump for a good part of the past year.
Expect more of a slowdown than a fall; and take your ego out of the equation when pricing your property.