2023 Real Estate In Review

December showed a surge in closings, with sales volume up 15.5 percent over November, and 28.3 percent above last December's numbers. This closed a year that fared far better than expectations, with a median sales price growth of almost 10%.

Interest Rates and Inventory were the driving factors in Real Estate across the US in 2023, as well as in our market. It is clear that we are now past the peak in Interest rates, and the expectation is for rates to be around 7% in Q1 of 2024, moving down to 6-6.5% by end of year. This will hopefully loosen some inventory and help with affordability. Interestingly, cash sales grew to 46 percent of total sales, a factor that has kept our primarily second home market going strong.

Inventory was tighter in 2023 than in 2022, with even our second homeowners not having options in other markets. The number of homes sold was down by more than inventory numbers, due to buyers choosier about homes and being less open to having to make upgrades to homes. With the higher cost of money, there is less budget for repairs, and concerns about finding contractors. In 2023 we saw more homes fall out of contract during repair negotiations than in several previous years. Versus the intense market in 2020-2022, sellers need to more thoroughly prepare their homes for sale and take care of repair items prior to listing.

A distinct inventory challenge in our market is the lack of new construction. The limited builders are working on custom homes, and the terrain makes it more challenging for spec building and new developments. Land sales were down by 26.7% from 2023, as buyers are not able to build in a timely manner, with many builders having two year waiting lists. The net of this is that demand for existing homes will continue to be strong.

Prices will not be falling in our market in the foreseeable future, so concerns or hopes about dropping prices should not be driving a purchase or selling decision. In 2023 we expected prices to be flatter, and median price grew by almost 10%. For 2024 pricing growth will likely be slower. We are seeing more price reductions, as sellers are wanting to 'test' the market with a high price, then needing to reduce.