Market Update July 8th, 2024

In recent analyses of the real estate market, particularly focusing on the single-family detached segment, we have delved into contract ratios across various price ranges, comparing data from July 1st, 2024 to the same date in 2023 and 2022 (See 2nd graph below). This examination provides a comprehensive view of market dynamics over the past three years, revealing shifts in buyer behavior and market conditions. By scrutinizing these changes, we can better understand the factors influencing the real estate market's ebb and flow.

The market conditions of July 2022 were notably turbulent due to a rapid increase in interest rates, which sent shockwaves through the real estate sector. The immediate impact was a significant drop in contract ratios from their highs in June 2022, particularly affecting the low to mid price ranges. This sudden shift was largely driven by buyer panic, reacting to the climbing interest rates, which markedly cooled the market enthusiasm that was present earlier in the summer.

However, by July 2023, the market demonstrated a robust recovery, driven by a stark reduction in supply. This scarcity of available properties propelled contract ratios to elevated levels, marking a return to a more competitive market environment. Notably, this resurgence was most pronounced at the lower end of the market, where competition intensified, reflecting a significant turnaround from the previous year’s downturn.

Moving forward to July 2024, the market presents a contrasting scenario characterized by a more balanced interplay between supply and demand. Although certain price segments, such as those under $300K and between $400K and $500K, have shown stronger performance compared to two years ago, the overall market is softer than in 2022. It is interesting to observe that the segment above $10M has bucked the trend, showing a hotter market than in both the previous years, whereas luxury price ranges between $800K and $10M have cooled significantly, indicating a shift in buyer interest and market dynamics. Through these observations, we gain a nuanced understanding of the varying forces at play across different market segments.

We are seeing two different buyer pools in split markets right now. Those in the ultra-luxury market, and those in the starter home/move-up market! Know your sub-market and know how pricing and demand are affecting each other right now! 
 

Have a great week everyone!